Among the causes of the Great Depression, Keynes would agree with all of the following explanations EXCEPT
A. There was insufficient aggregate demand to achieve full employment.
B. There was a lack of investment on the part of businesses because interest rates were too high.
C. Supply had not created its own demand.
D. Labor unions and businesses resisted wage and price cuts.
B. There was a lack of investment on the part of businesses because interest rates were too high.
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In the above, which figure(s) show(s) relationship between the variables that is always positive?
A) Figure A only B) Figures C and D C) Figures A and C D) Figures A, C, and D E) Figures A and B
An increase in unemployment insurance and other transfer payments may
A) increase the natural rate of unemployment. B) increase the number of discouraged workers. C) reduce the rate of inflation at every level of unemployment. D) lead to less unanticipated inflation.
If the Fed changes the interest rate, there will be
a. a movement along the aggregate expenditure line followed by a shift in the line b. no movement along the aggregate expenditure line because the effect is on investment c. a shift in the aggregate supply curve d. an increase in the money supply e. a shift in the aggregate expenditure line
Which of the following illustrates the wait-and-see lag?
A) Policymakers believe an economic downturn has occurred, but they decide not to take action until they are sure. B) Policymakers are in the process of proposing policy measures to deal with the current economic slowdown. C) Policymakers first learn of the recession when it is five months old. D) Policymakers implement policy X, but it will be a few months before it starts working. E) Policymakers agree to policy X, but it will be at least two months before the policy is implemented.