Answer the questions about Keynesian theory, market economics, and government policy.

Keynes believed that there were "sticky" wages and that recessions are caused by

A. decreases in aggregate demand (AD).

B. increases in unemployment.

C. increases in prices.

D. decreases in supply.

Answer: The correct answer is "A. decreases in aggregate demand (AD).".

Explanation: Keynes believed that there were "sticky" wages and that recessions are caused by decreases in aggregate demand (AD).

Keynes wondered how it was possible that having too many resources there were crises. What was your solution so that there was no excess of resources? Stimulate the demand for those excess resources to be consumed.

Keynesianism is based on state interventionism, defending economic policy as the best tool to get out of an economic crisis. Its economic policy is to increase public spending to stimulate aggregate demand and thus increase production, investment and employment.