Question

J.M Keynes thought government spending would be most useful when ______ spending fell as it would be expected to do at times because it is a volatile type of spending

A. Export spending
B. Import Spending
C. investment
D. Consumption

Answer 1

I beleive that the Consumption would be the right answer. Because Consumption is a volatile type of spending and when it slows down, the Government Spending should increase to restablish the economic equilibrium mantaining the growth. But the problem with this policy is that it is unsustainable in long term due to Public Debt increases.