Question

With Keynesian Policy during __________ government spending deficits are utilized to increase aggregate demand and stimulate the economy.

Answer 1

Contractionary phase

Step-by-step explanation:

Keynesian Economic Theory state that government should increase demand to boost economic growth. Keynesian economists believe that the consumer demand is the driving force of economy hence they support expansionary fiscal policy. According to this theory the main tools to boost economy are unemployment benefits, infrastructure and education. John Maynard Keynes proposed deficit spending during the contrationary phase of business cycle.