Which of the Following Statements About the Keynesian View of the Macroeconomy

question 16

Multiple Choice

Which of the following statements about the Keynesian view of the macroeconomy is incorrect?

• A)Expectations are based on "animal spirits."
• B)To achieve and maintain full employment, active help from fiscal policy and monetary policy is required.
• C)Expectations are the most significant influence on aggregate demand.
• D)Technological change is the most significant influence on both aggregate demand and aggregate supply.
• E)The money wage rate is extremely sticky in the downward direction so there is no automatic mechanism for eliminating a recessionary gap.

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Definitions:

Price-Earnings Ratio

The price-earnings ratio (P/E ratio) is a measure used in financial analysis to assess a company's valuation by dividing its current share price by its earnings per share.

Leverage

Using debt to increase the return on an investment.

Debt Financing

Raising funds for business activities by borrowing money, typically through loans or by issuing bonds.

Return on Total Assets

A financial ratio that measures a company's profitability relative to its total assets, indicating how efficiently it uses those assets to generate profit.