According to the Keynesian view, the prolonged unemployment of the United State\

Question

According to the Keynesian view, the prolonged unemployment of the United State's Great Depression was:

A. shocking because Keynesians believed that wage rates would decline and direct the economy to full employment.

B. shocking because Keynesians believed that lower interest rates would direct the economy to full employment.

C. because the total expenditures on goods and services were less than the full-employment rate of output.

D. because the federal government ran large budget deficits during the 1930s.

Explanation / Answer

C) Because the total expenditures on goods and service were then full employment rate output.

Great depression showed that failure of the working of the free market economy where the role of Government in economic activities is minimum, Keynes argued that in order to solve the deflation problem in the economy Government intervention must thus Government expenditure on public investment is necessary for the correcting the economy.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.