Keynes Disagreed with the Classical Model Because He Felt That

question 19

Multiple Choice

Keynes disagreed with the classical model because he felt that

• A) a modern economy has adequate levels of competition to ensure the flexibility of wages and prices.
• B) supply creates its own demand.
• C) in the long run, capitalism will be replaced by socialism.
• D) one cannot be certain that changes in interest rates equate saving to investment.
• E) the automatic mechanism in a capitalist society produces accelerating rates of inflation.

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Definitions:

Manufacturing Overhead

All manufacturing costs that are not directly traceable to a product, including indirect materials, indirect labor, and other indirect costs.

Flexible Budget

A budget that adjusts or changes based on the actual activity level or volume of work done, allowing for better control and planning.

Units

Basic measures of quantity or amount in specific contexts, such as inventory units in manufacturing or business.

Medical Supplies

Items used in the medical field for treatment, diagnosis, or preventive care, including bandages, syringes, and diagnostic kits.