Which of the following was 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 argued that there could be a situation where an economy remains mired in a recession, even when interest rates are low and that government intervention was necessary to bring the economy back to full employment. Therefore, option C is the correct choice.

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