Question

Which of the following economic perspectives focuses on the need for government to use spending and taxes to shift aggregate demand and thus correct problems of unemployment and inflation?

A. Supply-side
B. Keynesian
C. Classical
D. Monetarists

Answer 1

B. Keynesian

Step-by-step explanation:

Keynesian economics or theory believes that government can boost the economy and stimulate or increase demand, in times of economic downturn, by increasing spending and lowering taxes.

This increase in government activities will create jobs and reduce unemployment and lead to more spending and investment, by individuals and businesses, in the economy.