The Keynesian point of view suggests that
A. supply creates its own demand.
B. demand creates its own supply.
C. the market is always at equilibrium.
D. full employment is the natural result of market forces.
E. wage and price controls can halt deflationary pressures.
B. demand creates its own supply.
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Early Keynesians concluded that the quantity of money was not important because they assumed
a. low interest elasticity of money demand and high interest elasticity of the demand for output. b. high interest elasticity of money demand and low interest elasticity of the demand for output. c. high interest elasticity of money demand and high interest elasticity of the demand for output. d. both low interest elasticity of money demand and of the demand for output.
When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline