Which of the Following Is an Important Insight of Keynesian

question 102

Multiple Choice

Which of the following is an important insight of Keynesian analysis?

• A) When an economy is in a recession, lower interest rates and lower wage rates will quickly direct the economy back to full employment.
• B) When widespread unemployment is present, increases in aggregate demand will exert a larger impact on real output than when the economy is operating at or near full employment.
• C) When an economy is in a recession, it makes sense to increase taxes and reduce government expenditures.
• D) A balanced budget is the key to maintenance of full employment.

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