Ayushi posted an Question
August 14, 2020 • 04:54 am 30 points
  • UGC NET
  • Economics

21. how did keynes propose to solve the problem of high unemployment? (1) increase the growth rate of the money supply. (2) allow wages to decline, so that firm

21. How did Keynes propose to solve the problem of high unemployment? (1) Increase the growth rate of the money supply. (2) Allow wages to decline, so that firms will want to hire more workers. (3) Put on wage and price controls, so wages won't rise and firms won't have to lay people off to cut costs. (4) Have the government increase its demand for goods and services.

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    Nidhi taparia Best Answer

    The right answer is (4). Keynesian economics is primarily fiscal economics. For every problem he has suggested a solution involving the government. For high unemployment, he said if the government pursues an expansionary fiscal policy and increases its consumption and investment expenditure, it will create demand and opportunities for employment.

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