Keynesian economics advocates:
Correct answer: C. deficit spending to stimulate the economy
- A. stimulus spending to increase inflation
- B. deficit reduction to increase economic growth
- C. deficit spending to stimulate the economy
- D. fiscal restraint to bring down inflation
Explanation
Keynesian economics supports government deficit spending during weak economic conditions to raise aggregate demand, employment and output. Fiscal restraint is more associated with reducing inflation or public debt.
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