Keynesian Theory Was a Response to the Prevailing

question 52

Multiple Choice

Keynesian theory was a response to the prevailing

• A) classical theory that held that the economy could suffer from a period of sustained unemployment.
• B) classical theory that held that the economy is self-correcting.
• C) monetarist theory that held that the economy is self-correcting.
• D) monetarist theory that held that monetary policy should be used to return the economy to its potential output.

---

Definitions:

Unsystematic Risks

Risks that affect a specific company or industry, as opposed to the market as a whole, including management decisions or product recalls.

Well-Diversified Portfolio

An investment portfolio that spreads risk and opportunity across a wide range of assets and sectors, aiming to reduce the impact of any single investment's poor performance.

Diversifiable Risk

A type of investment risk that can be reduced through diversification, relating to factors affecting specific industries, companies, or securities rather than the market as a whole.

Publicly Traded Stocks

Stocks of companies that are traded on public stock exchanges, making them available to buy and sell by investors.