Which of the following best describes Keynes’ argument about the economy?
a. He argued the economy often produced less than its full potential because it was technically impossible to produce more with the existing workers and machines.
b. He argued the economy often produced less than its full potential, not because lack of demand in the economy as a whole led to inadequate incentives for firms to produce, but because it was technically impossible to produce more with the existing workers and machines.
c. He argued the economy often produced less than its full potential, not because it was technically impossible to produce more with the existing workers and machines, but because a lack of demand in the economy as a whole led to inadequate incentives for firms to produce.
d. He argued the economy often produced less than its full potential because it was technically impossible to produce more due to inadequate incentives for firms to produce.
c. He argued the economy often produced less than its full potential, not because it was technically impossible to produce more with the existing workers and machines, but because a lack of demand in the economy as a whole led to inadequate incentives for firms to produce.
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Over the next three years, the expected path of 1-year interest rates is 4, 1, and 1 percent. The expectations theory of the term structure predicts that the current interest rate on 3-year bond is
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Which of the following statements best describes one of the schools of thought regarding the “new economy” controversy?
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