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Ipatiy [6.2K]
3 years ago
14

According to Keynes, if aggregate demand is too high and an inflationary gap is beginning to develop in the economy, fiscal poli

cy should be contractionary. T/F
Social Studies
1 answer:
NNADVOKAT [17]3 years ago
4 0

Answer:  The correct answer is : True

Explanation:  A contractionary fiscal policy prescription or raising taxes and / or decreasing government spending will help to reduce aggregate demand and thus reduce the inflationary gap. Keynesian economics is a theory of total spending on the economy and its effects on production and inflation.

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