Question 40 (1 point)

Which of the following statements is true?

a

In 1906, John Maynard Keynes wrote The General Theory of Employment, Interest, and Money, a book in which he provided an alternative theory to the classical theory, which helped explain and solve recessions (and even depressions).

b

The modern aggregate expenditure model we are studying in this course is based on Keynesian economics (the set of ideas that have been proposed by Keynes and his followers). Keynesian economics is based on the idea that saving and investment decisions may not be coordinated, and that prices and wages are not very flexible downward (which can contribute to cyclical unemployment).

c

According to Keynesian economics, market forces can cause depressions (because the economy will not correct itself), and the government should play an active role in stabilizing the economy using macroeconomic policies, including fiscal and monetary policies.

d

All of the above.

e

Only b) and c)