Keynesian Revolution Quiz

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Questions and Answers

What is the central argument of The General Theory?

The level of employment is determined by the level of aggregate demand (correct)

The level of employment is determined by the price of labour

The level of employment is determined by the availability of capital

The level of employment is determined by government intervention

What did The General Theory contribute to economic thought?

It introduced the concept of the invisible hand

It emphasized the rationality of free-market decision making

It supported the classical economics orthodoxy

It gave macroeconomics a central place in economic theory (correct)

What was one consequence of The General Theory in economic policy interpretation?

It supported government non-intervention in the economy

It discouraged monetary intervention and counter-cyclical policies

It advocated for complete reliance on market forces

It provided theoretical support for government spending and budgetary deficits (correct)

What did Keynes deny about the economy in equilibrium?

It would automatically adapt to provide full employment Signup and view all the answers

What did The General Theory introduce as concepts?

The consumption function and liquidity preference Signup and view all the answers

What did The General Theory attack?

Classical economics orthodoxy Signup and view all the answers

What did Keynes challenge in his book The General Theory of Employment, Interest and Money?

The classical economic wisdom of his day Signup and view all the answers

In which chapter of The General Theory does Keynes present his main theory?

Chapter 18 Signup and view all the answers

What is the main focus of Book I: Introduction of The General Theory?

Rejection of the classical view represented by Say's Law Signup and view all the answers

According to Keynes, what did the classical theory assume about the economic society?

The classical theory's assumptions were limited to a special case Signup and view all the answers

What did Keynes emphasize by placing the prefix 'general' in the title of his book The General Theory of Employment, Interest and Money?

The general applicability of his arguments and conclusions Signup and view all the answers

In what year did Keynes predict that his book would revolutionize the way the world thinks about its economic problems?

1935 Signup and view all the answers

'I have called this book the General Theory of Employment, Interest and Money, placing the emphasis on the prefix general.' What did Keynes mean by this statement?

Keynes aimed to contrast his book with classical economic theories by emphasizing its general nature Signup and view all the answers

'The object of such a title is to contrast the character of my arguments and conclusions with those of the classical theory...' What did Keynes intend to achieve with the title 'The General Theory of Employment, Interest and Money'?

To challenge existing economic thought and provide a new perspective on economic issues Signup and view all the answers

'The first chapter of the General theory (only half a page long) has a similarly radical tone.' What does this statement suggest about the tone of Keynes's book?

'The General Theory' presents controversial and revolutionary ideas Signup and view all the answers

Study Notes

The General Theory of Employment, Interest and Money

The General Theory is a book that challenged classical economic thought and introduced new concepts that revolutionized economic policy.

Contributions to Economic Thought

The General Theory contributed to economic thought by introducing new concepts, challenging classical assumptions, and providing a new perspective on economic policy.

Central Argument and Main Theory

The central argument of The General Theory is presented in Chapter 3, where Keynes presents his main theory of employment, interest, and money.
The main focus of Book I: Introduction is to introduce the concept of the general theory.

Challenges to Classical Theory

Keynes denied that the economy is in equilibrium and challenged the classical theory's assumption that the economic society is self-adjusting.
The General Theory attacked the classical theory's assumption that the economy is always at full employment.

New Concepts and Emphasis

The General Theory introduced new concepts, including the importance of aggregate demand, the role of government intervention, and the concept of liquidity preference.
By placing the prefix "general" in the title, Keynes emphasized that his theory was a general theory, applicable to all economic societies.

Tone and Impact

The tone of Keynes's book is radical, as seen in the first chapter, which sets the tone for the rest of the book.
Keynes predicted that his book would revolutionize the way the world thinks about its economic problems, and indeed it had a significant impact on economic policy.
The title "The General Theory of Employment, Interest and Money" was chosen to contrast with classical theory and emphasize the general applicability of Keynes's theory.

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Description

Test your knowledge of the influential book 'The General Theory of Employment, Interest and Money' and its impact on economic thought and policy. Explore the concepts and terminology that emerged from the 'Keynesian Revolution'.