Which of the Following Statements Is True About Keynes' Macroeconomic

question 19

Multiple Choice

Which of the following statements is true about Keynes' macroeconomic theory?

• A) Keynes agreed that the notion that the economy would achieve the potential level of output in the long run is crucial to explaining prolonged recessions.
• B) Keynes dismissed the notion that the economy would achieve full employment in the long run as irrelevant in explaining prolonged recessions.
• C) Keynes stressed the notion that the economy would achieve price stability in the long run only if expansionary fiscal and monetary policies were used to address recessions.
• D) Keynes argued that the economy would achieve full employment in the long run because of wage and price flexibility.

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Definitions:

Underground Transactions

Economic activities that occur outside of the formal economy and are not reported to government agencies, often to avoid taxes or regulation.

Price Floor

A government or regulatory minimum price set above the equilibrium price, intended to ensure market participants receive a fair return.

Moral Argument

A rationale based on ethical principles and values to persuade or justify particular actions or beliefs.

Political Argument

A reasoned discourse or debate focused on a specific political issue, policy, or idea.