The Keynesian approach assumes that
A. the economy is self-regulating.
B. the government budget is always in deficit.
C. the price level does not change.
D. there is no unemployment in the economy.
Answer: C
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Countercyclical fiscal policy refers to
a. any fiscal policy that cycles between budget surpluses and budget deficits b. the use of taxes and government spending to keep the economy close to potential GDP in the short run c. any fiscal policy that is employed during a business cycle d. the use of open market purchases of bonds to keep the economy close to potential GDP in the short run e. the use of changes in tax rates to keep the economy at potential output in the long run
Compare two economies: a barter economy versus an economy that uses money. In order to exchange goods and services:
A. the money economy requires that sellers have more information about buyers' wants. B. transactions are likely to be smoother in the barter economy because goods and services are exchanged directly. C. a double coincidence of wants is necessary in the barter economy. D. a double coincidence of wants is more likely to occur in the barter economy.
The total of all planned production for the economy is
A. aggregate supply. B. equal to the total value of unplanned production. C. endowments. D. aggregate demand.
Who benefits from a subsidy to buyers?
A. Only sellers benefit from any kind of subsidy. B. The benefit is shared depending on the elasticity of the supply and demand curves. C. Only consumers benefit, since it is their subsidy. D. None of these statements is true.