Keynes Argued That Aggregate Demand Is

question 12

Multiple Choice

Keynes argued that aggregate demand is

• A)stable,because the economy tends to return to its long-run equilibrium quickly after any disturbance to aggregate demand.
• B)stable,because changes in consumption are mostly offset by changes in investment and vice versa.
• C)unstable,because waves of pessimism and optimism create fluctuations in aggregate demand.
• D)unstable,because of long and variable policy lags that worsen economic fluctuations.

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Definitions:

Hydrophobic End

The part of a molecule that repels water, often found in molecules like lipids that have both hydrophilic (water-attracting) and hydrophobic (water-repelling) ends.

Hydrophilic End

The part of a molecule that is attracted to water, allowing it to dissolve or interact favorably with water molecules.

Condensation Reaction

A reaction in which two monomers are combined covalently through the removal of the equivalent of a water molecule; also called condensation synthesis. Compare with hydrolysis reaction.

Polymer

Large molecules composed of repeated subunits, which may be identical or different, known as monomers.