Which macroeconomic theory's central belief is that, in order to keep people employed, governments need to run up deficits during economic downturns through increased spending and tax breaks?

Question

Laissez-faire economics
Keynesian Economics
Supply-side economics
Monetarism theory

Answer 1

The macroeconomic theory that holds the belief that governments need to run up deficits during economic downturns through increased spending and tax breaks to keep people employed is Keynesian Economics. This theory, proposed by John Maynard Keynes, emphasizes the role of government intervention in stabilizing the economy during periods of recession.