Which Statement Is Consistent with the Keynesian Theory

question 84

Multiple Choice

Which statement is consistent with the Keynesian theory?

• A) Short-run economic fluctuations are caused by unstable aggregate demand; therefore, policy instruments should be used to stabilize the economy.
• B) Irrational waves of optimism would cause a reduction in aggregate demand and decrease unemployment.
• C) Changes in business and consumer expectations generally stabilize the economy.
• D) Changes in consumer confidence are irrelevant for the economy.

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Definitions:

Product or Service Restrictions

refer to limitations or rules placed on the sale or provision of certain goods or services, often for safety, legal, or ethical reasons.

Franchise Contracts

Legal agreements granting someone the rights to operate a business under a franchisor's brand and business model.

Indefinitely

For an unspecified or unlimited period of time.

15 to 20 Years

A time frame often referenced in contexts such as long-term investments, mortgage terms, or the expected lifespan of durable goods.