Money
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Questions and Answers

According to the text, what is the central tenet of Keynesian economics?

  • Aggregate supply is the most important driving force in an economy
  • Free markets automatically provide full employment
  • Inadequate overall demand leads to decreased government intervention
  • Government intervention can stabilize the economy (correct)

    • What did John Maynard Keynes assert as the most important driving force in an economy?

  • Household savings
  • Aggregate demand (correct)
  • Aggregate supply
  • Government spending

    • What did existing economic theory fail to provide during the Great Depression?

  • Support for government intervention in stabilizing the economy
  • Explanation of the causes of the severe worldwide economic collapse
  • Adequate public policy solution to jump-start production and employment (correct)
  • Recognition of the importance of money in the economy

    • What did Keynesian economists justify government intervention for?

    <p>Achieving full employment and price stability (C)</p> Signup and view all the answers

    According to Keynes, what could lead to prolonged periods of high unemployment?

    <p>Inadequate overall demand (A)</p> Signup and view all the answers

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