The Keynesian Macroeconomic Model Was Highly Popular for Several Decades

question 103

Multiple Choice

The Keynesian macroeconomic model was highly popular for several decades following World War II because it provided an explanation for

• A)the strong economic recovery following the end of the war.
• B)the high inflation rates of the 1950s.
• C)the prolonged unemployment of the 1930s.
• D)the high rate of investment during the Great Depression.

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Definitions:

Market Rate of Interest

The prevailing rate of interest available in the market for investments of comparable risk and term.

Bond Indenture

A legal contract outlining the terms and conditions between the bond issuer and the bondholders.

Convertible Feature

A characteristic of some bonds or preferred stocks that allows them to be converted into a specified number of common shares, usually at the discretion of the holder.

Floating-rate Bond

A bond whose interest payments vary with market interest rates, as opposed to a fixed-rate bond.