Which of the following 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.

Question

Quizplus · Accepted Answer

Keynes's central argument in the General Theory was that modern industrial economies do not tend automatically toward full employment rates of output. He believed that there could be a persistent lack of aggregate demand in the economy that could result in unemployment and underutilized resources. This argument led him to advocate for government intervention in the economy to stimulate demand during times of recession.

Which of the Following Is a Central Argument of Keynes's