Answer to Question #196208 in Macroeconomics for Nolo

Question

According to the Keynesian school of thought, the government has an important stabilisation function in the economy. What points would you use to disagree with this statement?

Answer 1

I disagree with this statement because the government should increase its expenditures and decrease the taxes and also ensure the unemployment rate is minimal. But this is not the case with most governments. In some countries the government has reduced its spending and keeps on increasing taxes, which adversely affects the economy.