Keynesian economics is an economic theory of British economist John Maynard. What this theory states ?
Correct answer: C. Active government intervention is necessary to ensure economic growth and stability
- A. A free market is necessary for economic growth and stability
- B. Regulation is necessary for economic growth and stability
- C. Active government intervention is necessary to ensure economic growth and stability
- D. Government intervention is not necessary to ensure economic growth and stability
Explanation
Keynesian economics holds that private demand may be insufficient for stable growth and employment, so government can use fiscal and related policies to support the economy. It therefore emphasizes active intervention rather than relying entirely on an unrestricted market.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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