Asked by Sukhkaran Dhaliwal on May 16, 2024
Verified
Which of these is a central argument of Keynes's General Theory?
A) Competition does not allocate resources efficiently in a modern industrial economy.
B) Full employment can be maintained even during a major recession if wage rates are lowered far enough.
C) Modern industrial economies do not tend automatically toward full employment rates of output.
D) Money does not play an important role in either causing or curing recession.
E) Government can best stabilize the economy by letting the market system automatically adjust toward full employment.
General Theory
A broad and fundamental principle or set of principles intended to explain a major phenomenon or field of study.
Full Employment
The level of employment where all who are willing and able to work at current wage rates are employed; often considered an indication of an economy's health.
Industrial Economy
An economy characterized by significant industrial activity, often involving manufacturing and the production of goods.
- Acquire knowledge on the basics of Keynesian economics and its methodology in tackling recessions through the application of fiscal policy.
- Determine the origins of economic shifts and the contribution of state interventions in counteracting these shifts.
Verified Answer
KD
Katrina DanticaMay 18, 2024
Final Answer :
C
Explanation :
Keynes argued that modern industrial economies do not tend automatically toward full employment rates of output, which requires active government intervention to stabilize the economy.
Learning Objectives
- Acquire knowledge on the basics of Keynesian economics and its methodology in tackling recessions through the application of fiscal policy.
- Determine the origins of economic shifts and the contribution of state interventions in counteracting these shifts.