Question

Which of the following statements is a fundamental part of Keynesian economics?

A. The economy will only reach equilibrium and prosperity through the self-regulation of the free market. (Not A)

B. The government should reduce taxes to promote economics growth by increasing aggregate supply. (Not B)

C. The government can use deficit spending to increase aggregate demand and pull the economy out of recession. (Is the correct answer I failed 3 times in a row so I found out

Answer 1

B) The government should reduce taxes to promote economic growth by increasing aggregate supply.

Step-by-step explanation:

The heart of the supply-side argument is that a tax cut increases total employment so much that the government actually collects more in taxes at the new, lower tax rate.

Answer 2

The government can use deficit spending to increase aggregate demand and pull the economy out of recession- this is a fundamental part of Keynesian economics.

Option: C

Step-by-step explanation:

Keynesian economics has given emphasis on government expenditure and output so that at the time of inflation or depression market economy does not suffer. If the rate of tax reduce the demand of product will rise and will affect market economy in a beneficial way.

Government even can use deficit spending to increase aggregate demand and pull the economy out of recession. The rate of demand will be higher than the supply. It also restrain government expenditure so that it can promote healthy economy in the next turn.