Question

How did countries change their economies in response to John Maynard Keynes's ideas?

a. They became more willing to regulate private businesses.
b. They began to tax foreign imports at a much higher rate.
c. They eliminated welfare programs for the very poor.
d. They reduced business taxes to encourage job growth.

Answer 1

In response to Keynes's ideas, countries adapted their economies by increasing government regulation, spending during downturns, and providing tax incentives to boost consumption and investment, with the goal of spurring economic growth and eventually balancing out the increased spending with higher tax revenues.

Step-by-step explanation:

Countries changed their economies in response to John Maynard Keynes's ideas primarily by becoming more willing to regulate private businesses. Keynesian Economics advocates for the government to play an active role during economic downturns by increasing government spending and providing tax breaks to stimulate consumption and investment. This includes policies such as pensions for the unemployed and tax incentives for the middle class, which encourage spending that supports production and investment. The increased consumption was believed to reinvigorate economic growth which would, in turn, generate higher tax revenues to offset the initial deficit spending. However, this approach was challenged by supply-side economics in the 1970s, which promoted reducing taxes and regulations to spur economic growth.