What Do Keynesians Mean When They Say That "You Can't

question 156

Multiple Choice

What do Keynesians mean when they say that "you can't push on a string"?

• A) An increase in the supply of goods does not really create its own demand.
• B) If the government reduces taxes in an attempt to increase household consumption,it will not always work.
• C) An increase in the money supply will not always stimulate the economy.
• D) If the government wants to get something done,the best way is not to force the issue,but to offer incentives.
• E) If the government puts too much expansionary pressure on the economy,it will probably "overheat."

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Definitions:

Real Wages

Wages adjusted for inflation, representing the purchasing power of income received by workers, indicative of the real value of compensation over time.

Ford Administration

Pertains to the presidency of Gerald Ford in the United States, spanning from 1974 to 1977, marked by its efforts to heal the nation after the Watergate scandal.

Pardoned

The act of forgiving or being forgiven for an error or offense.

Oil Embargo

Prohibition on trade in oil declared by the Organization of Petroleum Exporting Countries, dominated by Middle Eastern producers, in October 1973 in response to U.S. and western European support for Israel in the 1973 Yom Kippur War. The rise in gas prices and fuel shortages resulted in a global economic recession and profoundly affected the American economy.