ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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government should be used as a tool to increase demand for goods.
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demand for goods increases when prices rise.
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taxes have a strong negative influence on economic output.
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the government should have a limited role in regulating the economy.
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Detailed explanation-1: -Joan Robinson, Nicholas Kaldor and John R. Hicks, are just some of the great disciples of Keynes, and therefore Keynesian economists, mainly from the Cambridge School in its not neoclassical meaning, to name a few.
Detailed explanation-2: -For example, Keynesian economists would advocate deficit spending on labor-intensive infrastructure projects to stimulate employment and stabilize wages during economic downturns. They would raise taxes to cool the economy and prevent inflation when there is abundant demand-side growth.
Detailed explanation-3: -Keynesian economics, recognizes the role of government finance in sparking aggregate demand. Federal spending and tax cuts leave more money in peoples’ pockets, which can stimulate demand and investment.
Detailed explanation-4: -Keynesian economics argues that demand drives supply and that healthy economies spend or invest more than they save. To create jobs and boost consumer buying power during a recession, Keynes held that governments should increase spending, even if it means going into debt.