Who amongst the following said that the government fiscal policy should be used to stabilise the level of output and employment?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. J.M. Keynes .
He advocated that government fiscal policy—such as adjusting public spending and taxation—should be used actively to stabilize the economy, particularly the levels of output and employment. Keynes argued this in his landmark work, The General Theory of Employment, Interest, and Money (1936), during the Great Depression. He believed that during economic downturns, government intervention was necessary to boost demand and reduce unemployment. This approach contrasts with classical economists like Alfred Marshall and Adam Smith, who favored limited government involvement. Hence, J.M. Keynes is the thinker behind this fiscal policy idea.
Other options:
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Alfred Marshall – Known for microeconomic theories and price mechanisms.
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Adam Smith – Advocated laissez-faire and the “invisible hand” concept.
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Lionel Charles Robbins – Defined economics as the study of scarce resources and their allocation.