Question

During a severe recession, businesses are reluctant to invest, and consumer spending has declined significantly. Unemployment rates are high, and there is a general lack of confidence in the economy. According to Keynesian economics, what would be the most appropriate government response in this situation?

A Reduce government spending and increase taxes.
B Increase government spending and decrease taxes.
C Maintain a balanced budget.
D Rely on the free market to self-correct.
E Implement wage and price controls.
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