Keynes Thought That One Macroeconomic Problem Is That an Economy

question 70

Multiple Choice

Keynes thought that one macroeconomic problem is that an economy:

• A)can tend toward an equilibrium level of output that is below the potential level.
• B)will move back to its potential after a business cycle on its own.
• C)always operates at the potential and business cycles are created by government intervention.
• D)can be pushed below the equilibrium level of output by fiscal policy.
• E)can be pushed away from the potential if prices and wages are flexible.

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Definitions:

Drive-Reduction

A motivational theory suggesting that the primary purpose of behavior is to reduce drives or needs, thereby returning the organism to a state of homeostasis or balance.

Biological Needs

Fundamental requirements that organisms need to maintain life, such as food, water, air, and shelter, which are essential for survival and physiological functioning.

Evolutionary Theory

A scientific explanation for the diversity of life on Earth, proposing that species change over time through processes like natural selection.

Genetically Predisposed

Indicates a higher likelihood of developing certain conditions or traits based on one's genetic makeup.