SIE Exam Question 269: Answer and Explanation

Question: 269

Keynesian economic theory deals with:

• A. Controlling the economy through regulating money supply.
• B. Controlling the economy through budget/government spending and taxation policies
• C. Incentivizing responsible financial behaviors through Congressional legislation and agency regulations
• D. None of the above

Correct Answer: B

Explanation:

B: Though a very simplistic way of describing Keynesian theory, it focuses on government taxation and spending policies, which are fiscal in nature. Answer A would be more appropriate if we were asking about monetary policies, which would be the work of the Federal Reserve.