Q. The main principle of Keynesian economics is:

[A] Economic growth is best achieved by focusing on international trade.

[B] Government intervention is crucial to stabilize demand during economic downturns.

[C] Inflation is caused only by an increase in the money supply.

[D] Long-term economic equilibrium is always achieved without external interventions.

Answer: B
Notes:

Explanation – The main principle of Keynesian economics is that aggregate demand (total spending in the economy) drives economic output and employment. Keynes argued that during economic downturns, private sector demand may fall short, leading to recessions and high unemployment. To address this, government intervention through fiscal and monetary policies is necessary to stabilize demand, stimulate economic activity, and achieve full employment and price stability.

Source: The Hindu

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