Why do Keynesians believe that the economy needs fiscal and monetary policy?
A. Because the economy is self-regulating. It will get itself out of recessionary and inflationary gaps automatically.
B. Because the economy may get stuck in a recessionary gap and in an inflationary gap, it is important for the government to save for those periods when the economy is in a recession and the gov needs to spend.
C. Because the economy is always at its natural real GDP.
D. Because the economy may get out of a recessionary gap and in an inflationary gap, it is important for the government to spend for those periods when the economy is in a recessionary gap and the gov needs to save.