Final answer:
According to Keynesian economics, the primary reason an economy remains in a recession is that aggregate demand stays low. Decreases in consumption due to wealth declines and reduced investment from businesses contribute to this. Keynes advocated for government intervention to stimulate economic recovery.
Step-by-step explanation:
The main reason that an economy can get stuck in a recession for a prolonged period of time, according to Keynes and his followers, is that C) Aggregate demand remains low. Keynesian economics posits that recessions are primarily due to a shortfall in aggregate demand, which is the total demand for goods and services in an economy. When events such as a stock market crash or housing market collapse occur, consumer wealth declines, leading to a decrease in consumption expenditure. This in turn diminishes expectations of the profitability of investments and leads businesses to curtail their investment expenditure. In effect, the intersection of aggregate supply and aggregate demand occurs at a level of output that is less than full employment GDP.
Keynes recognized the importance of government intervention to stimulate aggregate demand during recessions through increased government spending or adjusting tax rates. This is based on the belief that private sector entities may not invest in a falling economic climate due to low consumer confidence and profitability expectations. Therefore, Keynes concluded that in such extreme conditions, only government action could effectively shift aggregate demand to promote economic recovery.