Discuss how the Great Depression contributed to the development of Keynesian economics
During the Great Depression, high levels of unemployment and contracting Real GDP plagued many countries around the world. The classical assertion in a self-regulating economy, one that could heal itself of its economic ills, was not working out. This led Keynes and his followers to conclude that laissez-faire was not a viable policy stance, and that the economy was inherently unstable.
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Suppose a bank is exactly meeting its desired reserve ratio of 10 percent and a new deposit of $75,000 is made. Immediately after the deposit is made, the bank's excess reserves equal
A) zero. B) $7,500. C) $67,500. D) It is impossible to determine without additional information.
The money supply consists of:
A) currency plus reserves. B) currency plus required reserves. C) currency plus excess reserves. D) currency plus demand deposits.
Suppose the economy is producing at the natural rate of output and the government passes legislation that severely restricts a company's ability to reduce production costs via outsourcing
Everything else held constant, this policy action will cause ________ in the unemployment rate in the short run and ________ in inflation in the short run. A) an increase; an increase B) a decrease; a decrease C) a decrease; an increase D) no change; no change
If the average cost of a product is $10 per unit and the price is $5, the firm is losing money
a. True b. False Indicate whether the statement is true or false