The idea that governments could manage business cycles by influencing AD was first developed by John Maynard Keynes during the: a) 1930s b) 1700s c) 1970s

Business Dec 23, 2020

The idea that governments could manage business cycles by influencing AD was first developed by John Maynard Keynes during the:

a) 1930s

b) 1700s

c) 1970s

Expert Solution

The correct option is (a) - 1930s.

The US economy was hit by great depression during 1929 where the classical economist theory fails to make the economy out of the recession by changing the level of the money supply. Therefore, to overcome this depression, the economist "John Maynard Keynes" developed the theory of business cycle which occurs by changing the level of the AD in the economy.

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