Question

Which school of economic thought originated in the 1930s and argued that the key to overcoming the Great Depression was to have the Federal Government borrow more money and spend it on various programs, such as public infrastructure projects, in order to increase the economy’s total monetary demand for commodities and labor?

	A.	Marxist School of Economics
	B.	Austrian School of Economics
	C.	Keynesian School of Economics
	D.	Monetarist School of Economics

Answer 1

Keynesian School of Economics are generally invented by Keyns during the month of great depression of 1930 .Keynes advocated for increased government expenditures and lower taxes to stimulate demand and pull the global economy out of the depression.  His groundbreaking book called “General Theory Of Employment, Interest, And Money” caused a paradigm shift for the economists.

The impact on output and inflation by the economy’s total spending are the are of features Keynesian economics also known as aggregated demand. A Keynesian believes that aggregate demand is persuaded by decision of people and the government in perspective of economics that occasionally behaves inconsistently. The most prominent public decisions include those relating to money or currency and relating to public revenues , especially the revenues from taxation( fiscal) policies.

Keynesians believe that, since prices are fairly rigid, and changes related to any part of investment, government spending expenditure or consumption can lead to fluctuation of productivity. In case for example, If all the components of government spending are not to be changed and held constant except spending by the government increases, there would more output. Multiplier effect, is a part of Keynesian economics; the original change by a multiple in spending leads to the increase in the output.

Hence ( C ) part is a correct answer