Which of the Following Statements Is False

question 184

Multiple Choice

Which of the following statements is false?

• A) Keynesians would not advocate an expansionary monetary policy to eliminate a recessionary gap if they believed that investment demand was interest-insensitive.
• B) Keynesians would not advocate an expansionary monetary policy to eliminate a recessionary gap if they believed the money market was in the liquidity trap.
• C) Keynesians would advocate an expansionary monetary policy to eliminate a recessionary gap if they believed investment spending was insensitive to changes in the interest rate.
• D) Keynesians believe that money wages are inflexible in the downward direction.

---

Definitions:

Price Index

A measure showing the average level of prices for a specific set of goods and services over a period, indicating inflation or deflation.

Base Year

A specific year chosen as a point of reference or comparison for financial or economic data.

Price Index

A statistical measure that shows changes in the price level of a basket of consumer goods and services over a period of time.

Inflation Rate

The percentage rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.