Question

Economists warn that the nation is heading for a recession. Which of the following actions would John Maynard Keynes most likely support?
Increase funds for civic projects to put people to work

Decrease taxes across the board for individuals and businesses

Redistribute unemployment and Social Security funds to bail out failing banks

Reduce the money supply and keep interest rates high

Answer 1

The correct answer is answer A. Increase funds for civic projects to put people to work.

On the vision of John Maynard Keynes, the economy acts according to cycles of growth and decrease due to imbalances between the aggregate demand (Sum of the value of all goods and services demanded in a given economy) and the aggregate supply (Sum of the value of all the goods and services offered in a given economy).

According to this view, the diagnosis that a "recessive cycle" is approaching (seen as a consequence of a decrease in aggregate demand with respect to the aggregate supply) should be counteracted by an increase in aggregate demand through projects of infrastructure and civil community work that on the one hand generate sources of employment tending to guarantee the full employment of the economically active population and on the other hand apply the multiplying factor of demand from the growing needs of provision of construction materials, machinery, auxiliary services, etc.

In other words, by increasing aggregate demand through increasing public spending, according to the policies proposed by Keynes, the recessive phenomenon is corrected and the decline cycle is more quickly and effectively than the free market would have done functioning by itself.

Answer 2

John Maynard Keynes would most likely support this one:
Decrease taxes across the board for individuals and businesses