The Major Difference Between the Keynesian Model and the Classical

question 73

Multiple Choice

The major difference between the Keynesian model and the classical theory of employment is that

• A)the interest rate will not always equalize savings and investment.
• B)not everything produced will necessarily be purchased.
• C)saving and investing are done by different people for different reasons.
• D)wages and prices are assumed to be flexible downwards.

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Definitions:

Efficient Frontier

A portfolio optimization concept that outlines the set of optimal portfolios offering the highest expected return for a defined level of risk or the lowest risk for a given level of expected return.

Correlation

A statistical measure that describes the extent to which two variables move in relation to each other, ranging from -1 (perfect negative correlation) to +1 (perfect positive correlation).

Portfolio Weight

The proportion of the total value of an investment portfolio that is attributed to each individual investment.

Total Value

The summation of all assets or investments owned by an individual or entity, reflecting overall worth.