According to the Keynesian perspective, what role does government intervention play in the economy?

In the Keynesian perspective, government intervention plays a crucial role in managing economic cycles. This approach posits that during periods of economic downturn, such as recessions, private sector demand may be insufficient to sustain full employment and stable economic growth. Therefore, government action is seen as necessary to stimulate demand through fiscal policies, including increased public spending and tax cuts.

Keynesians believe that such intervention can help to boost consumer confidence and spending, thereby mitigating the negative impacts of economic contractions. By increasing public spending, the government can directly create jobs and increase consumption, which in turn can lead to a multiplier effect, where the initial spending leads to further economic activity.

In contrast, the other options do not align with the Keynesian viewpoint. Avoiding government intervention would ignore the significant role it can play in stabilizing the economy. Focusing solely on controlling inflation neglects the holistic approach that Keynesians advocate for in managing overall economic performance. Lastly, dismissing the significance of government in the economy contradicts the foundational ideas of Keynesian economics, which emphasize the importance of active government involvement to promote stability and growth.