Based on the Belief That Prices Are Sticky and Inflexible,Keynesian

question 110

Multiple Choice

Based on the belief that prices are sticky and inflexible,Keynesian economists conclude that

• A) the economy is self-correcting and tends toward full employment.
• B) savings is a crucial component of economic growth.
• C) the long run deserves more focus than the short run.
• D) the economy is not self-correcting and can become stuck below full employment.
• E) government intervention is never necessary to promote full employment.

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Definitions:

Commodity Money

Money whose value comes from a commodity out of which it is made, such as gold and silver, which inherently have value.

Goldsmith

A craftsperson skilled in making items of gold.

Ownership Transfer

The process by which the legal rights to an asset are transferred from one party to another, often involving formal documentation.

Fractional Reserve Banking

A banking system in which only a fraction of bank deposits are backed by actual cash on hand and available for withdrawal, enabling banks to lend out more money than they hold.