What Did Keynes Argue About Aggregate Demand

question 29

Multiple Choice

What did Keynes argue about aggregate demand?

• A) Aggregate demand is stable because the economy returns to long-run equilibrium.
• B) Aggregate demand is stable because changes in consumption are mostly offset by changes in investment and vice versa.
• C) Aggregate demand is unstable and the government should actively stimulate aggregate demand when production is at less than its full employment level.
• D) Aggregate demand is unstable and economies should be left to deal with short-run fluctuations on their own.

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