One of the Major Weaknesses of the Original Keynesian Approach

question 80

Multiple Choice

One of the major weaknesses of the original Keynesian approach to the business cycle was

• A)the assumption that firms were perfectly competitive.
• B)the failure to explain why wages were rigid.
• C)the denial of the existence of the Pigou effect.
• D)the assumption that the demand for labor depended on the real wage.

---

Definitions:

Reciprocal

Mutual or given and received in return; employing mutual exchange between two or more parties.

Collective

A group or assembly of individuals who share common interests, values, or goals.

Positive Psychology

The scientific study of human strengths, virtues, and factors that contribute to personal well-being and happiness, aiming to improve quality of life.

Psychologically Healthy

A state of well-being in which an individual realizes their own abilities, can cope with the normal stresses of life, can work productively and fruitfully, and is able to make contributions to their community.