Question

From a Keynesian point of view, which is more likely to cause a recession: aggregate demand or aggregate supply, and why?

Short answer

Aggregate demand is almost certain than aggregate inventory to be the immediate justification behind a short-run monetary occasion like a recession.

Step-by-step solution

Definition

Keynesian economics is a macroeconomic economic idea of entire spending in the economy and its impacts on output, occupation, and inflation.

Explanation

In the short run when there is a decrease in aggregate demand the cost would increase in the economy It will disincentivize investment and financial movements in the economy. Hence, the government through its fiscal policy must increase expenditure and reduce taxes when demand is deficient in the economy.