Question

The **Keynesian** view on public expenditure during a recession suggests that the government should:

• A. Decrease spending to reduce budget deficits.
• B. Increase spending to stimulate demand.
• C. Maintain current spending levels to avoid market disruption.
• D. Cut taxes to encourage private investment instead of direct spending.

Answer 1

Answer:

B. Increase spending to stimulate demand.

• Keynesian economics advocates for using government spending as a fiscal policy tool to boost aggregate demand during a recession, helping to restore economic activity and employment.