Keynesians tend to believe
A) the markets work freely.
B) that free market economics is faulty.
C) that government spending is the source of economic instability.
D) none of these choices.
B
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According to this Application, some households were willing to take on considerable mortgage debt because
A) they realized the mortgage debt would be more than offset by the tax deductions they could take on the interest paid on their mortgage loans. B) this was a safe investment in light of the rapidly increasing inflation in the economy. C) the government's federal home mortgage insurance program would compensate them for any loss in value they may realize based on the purchase price of their homes. D) they were confident they could make money as the values of their homes increased.
Joseph decides to join the Big State University's football team when he learns that his health insurance will pay for any subsequent injury. This illustrates
A) a moral hazard problem. B) monopolistic behavior. C) a symmetric information problem. D) oligopolistic behavior.