According to John Maynard Keynes, what is the most effective tool for reviving an economy during a depression?

Correct option is C

The correct answer is: (c) Expanding government expenditure
Explanation:
· John Maynard Keynes, in his General Theory (1936), argued that during a depression, aggregate demand falls, leading to unemployment and low output.
· To revive the economy, the government should increase public expenditure (fiscal stimulus) to boost demand, employment, and income.
· This is the foundation of Keynesian economics and deficit-financed public spending.
Information Booster:
· Keynesian theory emphasizes demand-side economics.
· Public works and welfare spending generate a multiplier effect in the economy.
· Contrast: Classical economists believed in self-correcting markets; Keynes opposed this.
· His ideas influenced policies like the New Deal in the USA (1930s).
· Modern fiscal stimulus packages (like post-COVID-19 recovery) are rooted in Keynesian thought.