Asked by
Brayden Leffler
on Oct 13, 2024Verified
Each of the following is consistent with Keynesian theory EXCEPT
A) Sometimes strong government intervention is necessary to end a depression.
B) The expected rate of profit is more important than the interest rate in determining the level of investment in an economy.
C) Our economy always tends toward equilibrium GDP but not necessarily full employment GDP.
D) Flexible wages and prices present in modern economies will end a recession.
Keynesian Theory
Keynesian Theory is an economic theory stating that government intervention through fiscal and monetary policy is necessary to manage aggregate demand and address economic cycles.
Government Intervention
Actions taken by a government to affect the economy, which can include regulations, subsidies, tariffs, and monetary policies.
Expected Rate Of Profit
The anticipated return on an investment, taking into account the risk and time value of money.
- Evaluate the function of governmental action in mitigating economic fluctuations according to Keynesian principles.
Verified Answer
SV
Learning Objectives
- Evaluate the function of governmental action in mitigating economic fluctuations according to Keynesian principles.