Which of the Following Policy Statements Would a Keynesian Economist

question 57

Multiple Choice

Which of the following policy statements would a Keynesian economist tend to support?

• A) The government central bank should encourage savings as a means of promoting economic growth.
• B) The government central bank should never intervene in the economy.
• C) The government central bank should intervene in the economy to stimulate the economy.
• D) The government central bank should intervene in the economy only when aggregate supply changes.
• E) The government central bank should focus on long-run aggregate supply, not aggregate demand.

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Definitions:

Money Supply

The whole of economic resources in an economy, represented by cash, coins, and checking and savings accounts' balances, at a given time.

Excess Reserves

Excess reserves refer to the capital reserves held by a bank or financial institution in excess of what is required by regulations, guidelines, or central bank requirements.

Individual Bank

A financial institution that deals with consumers and businesses to offer deposit, loan, and investment services on an individual basis.

Discount Rate

The cost in interest that commercial banks and similar storage institutions incur on borrowing from their regional Federal Reserve Bank’s loaning service.