Challenges to Keynesian Economics Were Based On

question 286

Multiple Choice

Challenges to Keynesian economics were based on:

• A)the fact that lags in fiscal policy make it relatively ineffective.
• B)the liquidity trap, which makes fiscal policy ineffective.
• C)the possibility of a trade-off between inflation and unemployment.
• D)the usefulness of discretionary fiscal policy.

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Definitions:

Substitution Effect

The change in consumption patterns due to a change in relative prices, where consumers substitute a cheaper alternative for a more expensive good.

Price

The cash value expected, required, or contributed in transaction for an item.

Delphiniums

A genus of perennial flowering plants known for their tall spikes of colorful flowers.

Second-Class Tickets

Tickets offering a lower level of service or comfort on public transport, often at a reduced price compared to first-class tickets.