Prior to the time of John Maynard Keynes, most economists stressed that
A) low levels of aggregate demand would lead to prolonged periods of unemployment.
B) market economies were inherently unstable because of fluctuating aggregate demand.
C) market adjustments would automatically direct an economy to full employment within a relatively brief period of time.
D) budget deficits and surpluses were necessary for the control of economic fluctuations.

Question

Quizplus · Accepted Answer

Prior to the time of Keynes, most economists believed in the classical view that market adjustments would automatically direct an economy to full employment within a relatively brief period of time. They believed that supply would create its own demand and thought that inflation was the result of excessive monetary growth. However, Keynes challenged these beliefs and argued that government intervention was necessary to maintain aggregate demand and stabilize the economy. Therefore, the correct answer is C.

Prior to the Time of John Maynard Keynes, Most Economists