How do Keynesian economists address economic recessions?
A.
with interest rate hikes
B.
with federal bond purchases
C.
with countercyclical spending***
D.
with tax increases for the wealthy
This was correct
Keynesian economists address economic recessions with countercyclical spending.
To understand how Keynesian economists address economic recessions, it is essential to grasp the core principles of Keynesian economics. Developed by economist John Maynard Keynes, Keynesian economics emphasizes the role of government intervention in managing economic fluctuations.
Keynesian economists argue that during an economic recession, there is a lack of aggregate demand, meaning that overall spending and investment within the economy decrease. To address this issue, Keynesian economists suggest countercyclical policies, which aim to boost demand and stimulate economic activity.
One such countercyclical policy recommended by Keynesian economists is countercyclical spending, also known as expansionary fiscal policy. This policy involves the government increasing its spending and investing in various sectors of the economy. By doing so, the government aims to create jobs, increase consumer spending, and stimulate economic growth. Examples of countercyclical spending measures include infrastructure projects, public works programs, and increased government expenditure in sectors such as healthcare and education.
Therefore, the correct answer to the question is C. Keynesian economists address economic recessions with countercyclical spending.