According to Keynesian Economic Theory, the Proper Government Response to a Recession

question 34

Multiple Choice

According to Keynesian economic theory, the proper government response to a recession is to

• A)maintain a balanced budget.
• B)minimize government regulation of the economy.
• C)stimulate economic demand by increasing spending.
• D)impose price controls to limit inflation.

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Definitions:

Inventory Investment

The purchase of goods and materials for the purpose of storing them for future sale or use in production.

Level of Inventory

Indicates the quantity of goods or materials a company has in stock at a given time, a critical factor in supply chain and operations management.

Disposable Income

The amount of income left to an individual after taxes have been paid, available for spending and saving.

Control

In an experiment or study, the standard to which comparisons are made; in management, the process of directing and regulating processes, systems, or organizations.