Which school would advocate government spending to end a recession? (LO4) a) Classical d) Supply-side b) Keynesian e) Rational expectations c) Monetarist

To answer this question, we first need to briefly understand the core ideas of each school of thought mentioned in the options. a) Classical - The Classical school of thought believes in the self-regulating nature of the economy, and it emphasizes the importance of market forces in determining economic outcomes. It does not generally support government intervention. b) Keynesian - The Keynesian school of thought, founded by economist John Maynard Keynes, stresses the importance of government intervention to stabilize the economy during times of recessions and depressions. This intervention could include increased government spending. c) Monetarist - The Monetarist school of thought focuses on the role of monetary policy in influencing economic activity. They believe that controlling the money supply is the key to managing inflation and unemployment rates, not necessarily advocating direct government spending. d) Supply-side - The Supply-side school of thought advocates for policies that promote economic growth by increasing the supply of goods and services. They focus on reducing taxes, regulations, and other barriers to production. While they may not disagree with government spending on infrastructure and growth-oriented programs, their primary focus is not government spending. e) Rational expectations - The Rational Expectations theory states that individuals and businesses make decisions based on their rational expectations of the future economic conditions. This theory suggests that government intervention may not have the intended effects due to the adaptive expectations of economic agents.

Based on our understanding of the core ideas of each school of thought, we can deduce that the Keynesian school of thought (option b) would be the most likely to advocate for government spending as a method to end a recession. This is because Keynesian economics believes in direct government intervention during times of economic downturn to stabilize the economy through increased spending on public projects, social programs, and other measures to boost demand and economic activity.