Keynesian Theory in Money & Banking: Lecture Three
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Questions and Answers

According to Keynesian economics, what is the primary focus for managing the economy?

  • Passive government policy
  • Active government policy (correct)
  • International trade agreements
  • Market forces

    • What is the central belief of Keynesian economics?

  • Market forces are self-regulating
  • Monetary policy is sufficient for economic stability
  • Tax cuts alone can stimulate demand
  • Government intervention can stabilize the economy (correct)

    • What did Keynes advocate for based on his theory of Keynesian economics?

  • Decreased government expenditures and higher taxes
  • Privatization of public services
  • Increased government expenditures and lower taxes (correct)
  • Complete reliance on free market forces

    • In Keynesian economics, what are the primary tools recommended to manage the economy and fight unemployment?

    <p>Activist fiscal and monetary policy</p> Signup and view all the answers

    According to Keynesian economics, what can achieve optimal economic performance and prevent economic slumps?

    <p>Influencing aggregate demand through economic intervention by the government</p> Signup and view all the answers

    What is the focus of Keynesian economics in terms of total spending in the economy?

    <p>Effects on output, employment, and inflation</p> Signup and view all the answers

    According to Keynesian economics, what intervention can achieve full employment and price stability?

    <p>Increase in government spending</p> Signup and view all the answers

    What was the main criticism of Keynes against the British government at the time?

    <p>Balanced budget without government intervention</p> Signup and view all the answers

    In Keynesian economics, what is the effect of excessive saving on the economy?

    <p>Dangerous for the economy</p> Signup and view all the answers

    What did Keynes propose as a solution to economic misery?

    <p>Government deficit spending</p> Signup and view all the answers

    According to Keynesian theory, what is one of the chief components of fiscal policy?

    <p>Multiplier effect</p> Signup and view all the answers

    What did Keynes argue against, as represented in his book The General Theory of Employment, Interest and Money?

    <p>Classical economic theory during deep depression</p> Signup and view all the answers

    What is another name for Keynesian economics, based on the context provided?

    <p>Depression economics</p> Signup and view all the answers

    According to Keynes' proposal, what would an increase in consumer demand lead to?

    <p>Increase in overall economic activity and reduction in unemployment</p> Signup and view all the answers

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