Question

John M Keynes was advocate of which of the following suggestions?

• A. Pending money recklessly during recessions is suicidal
• B. Exorbitant spending during recessions is likely to boost economy
• C. Aggressive deficit spending is likely to be fatal for economic meltdown
• D. Government stimulus to economy may not help because of red-tapism
• E. None of the above

Hint:

Keynes famously said, "In the long run, we are all dead," emphasizing the need for short-term intervention during recessions.

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
Keynesian economics advocates for increased government spending during recessions to stimulate demand.

Step 2: Detailed Explanation:
John Maynard Keynes argued that during economic downturns, private sector demand falls. The government should step in with increased spending (exorbitant spending) to boost aggregate demand, create jobs, and revive the economy. This is the core of Keynesian counter-cyclical fiscal policy.

Step 3: Final Answer:
Exorbitant spending during recessions is likely to boost economy