Keynesian Economists Think General Equilibrium Is Not Attained Quickly Because

question 50

Multiple Choice

Keynesian economists think general equilibrium is not attained quickly because

• A)the real interest rate adjusts slowly.
• B)the level of output adjusts slowly.
• C)the real wage rate adjusts slowly.
• D)the price level adjusts slowly.

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Definitions:

Real Interest Rate

It represents the rate of interest an investor expects to receive after allowing for inflation, fundamentally indicating the true return on an investment.

Inflation Rate

The annual rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling. Central banks attempt to limit inflation to maintain a healthy economy.

Nominal Interest Rate

The headline rate of interest paid on a loan or received on an investment, not adjusted for inflation.

Consumer Price Index

An index that measures the change in price level of a market basket of consumer goods and services purchased by households.