Answer:
C. government doesn't cut back on it later when it's not needed to stimulate the economy
Explanation:
The correct option is C. A limitation of Keynesian or demand side economics is that once government spending occurs the government doesn't cut back on it later when it's not needed to stimulate the economy. Higher interest rates and financial crowding out result from borrowing. In a downturn, Keynesian economics favored widening the budget deficit. It is asserted that this results in crowding out. The interest rate on bonds increases to allow a government to borrow more.
Keynesian theory is sometimes criticized for favoring a centrally controlled economy. It is indicated that if the government is required to spend money to prevent depression, it also knows what is best for the economy as a whole. By doing this, the influence of market pressures on decision-making is eliminated.
Potential trade-offs and policy conflicts while implementing demand-side initiatives. A very low base rate leaves limited room for additional reduction, which may be ineffective in promoting growth. Low unemployment and low inflation rates might be challenging to achieve since there is frequently a trade-off.
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