ECONOMICS
MONETARY POLICY
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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reduces the role of government.
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increases the role of government to stimulate an economy in recession.
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relies more heavily on the laws of supply and demand.
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more strongly emphasizes the importance of individual businesses to the overall health of the economy.
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Detailed explanation-1: -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.
Detailed explanation-2: -While Classical economists believe there should be limited or no government intervention in the market, Keynesian Economics posit that government spending can help jump-start an economy out of recession by increasing demand.
Detailed explanation-3: -Difference Between Classical and Keynesian Economics Keynesian economics believes that government spending is the most important economic activity. On the other hand, classical economics believes that a self-regulating economy is efficient and there is no need for government intervention.
Detailed explanation-4: -Keynesian economists justify government intervention through public policies that aim to achieve full employment and price stability.