Build a large public debt in order to stabilize the economy

Assignment Help Macroeconomics

Reference no: EM133439429

Question: Prior to the advent of Keynesian economic policy (using changes in government spending and tax rates to combat the ups and downs in the economic/business cycle) we had very little public debt - but had wide fluctuations in GDP, unemployment and inflation. The economy is more stable (shorter less frequent recessions, lower unemployment, less inflation) under Keynesian policies - but debt seems out of control.

1) Is it worth it to build a large public debt in order to stabilize the economy?

2) Who gets hurt by the growing debt?

3) Who does Keynesian policy help the most?

Reference no: EM133439429

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