Keynes's Insight During the Great Depression Was That

question 32

Multiple Choice

Keynes's insight during the Great Depression was that

• A) investment spending was too great to support high employment.
• B) consumption spending is detrimental to the economy.
• C) the economy can be in equilibrium and also have high unemployment.
• D) the unemployment rate is not a good indicator of the true state of the economy.

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Definitions:

Excise Tax

A tax levied on specific goods, services, or activities, often aimed at discouraging certain behaviors (like smoking) or generating revenue from specific sectors.

Tax Wedge

The tax wedge is the difference between what consumers pay and what producers receive for a good or service due to taxation, affecting supply and demand.

Inelastic Supply

A situation where the quantity supplied of a good or service is relatively unresponsive to changes in its price.

Excise Tax

A tax imposed on specific goods or services, such as tobacco, alcohol, and fuel, which is often used to discourage consumption or generate revenue for government projects.