John Maynard Keynes and his followers argued that
a. the classical model does a good job of explaining the economy's operation in both the short run and long run
b. the short run is unimportant so economists should focus their attention on the long run
c. the economy should be allowed to function with minimal government interference
d. the economy operates the same way in both the short run and long run
e. while the classical model might explain economic performance in the long run, the long run could take a long time to reach
E
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How does a tariff affect the domestic price of the import, the domestic consumption, the domestic production, and the quantity imported?
What will be an ideal response?
Which of the following correctly describes crowding out?
a. The displacement of interest-sensitive private investment that occurs when increased government deficit spending drives up interest rates. b. The potential for government spending to stimulate private investment in an otherwise sluggish economy. c. The displacement of poverty-stricken people from low-income assistance programs when outlays are reduced to balance the federal budget. d. The decline in market interest rates on account of increased fiscal spending on welfare programs.
In the long run, an increase in FDI in the manufacturing sector will __________ the return to capital in the ____________ sector(s).
a. decrease; agriculture b. increase; manufacturing c. decrease; manufacturing d. not change; manufacturing or agriculture
If inflation increases, one would expect that the Fed would:
A. reintroduce unconventional policy. B. wind down unconventional policy more slowly. C. change unconventional policy to conventional policy. D. wind down unconventional policy more quickly.