Which of the following is a major insight of the Keynesian model?
A)Changes in output,as well as changes in prices,play a role in the macroeconomic adjustment process,particularly in the long run.
B)A general overproduction of goods relative to total demand is impossible because production creates its own demand.
C)The responsiveness of aggregate demand to changes in supply will be directly related to the availability of unemployed resources.
D)Fluctuations in aggregate demand are an important potential source of business instability.

Question

Quizplus · Accepted Answer

The major insight of the Keynesian model is that fluctuations in aggregate demand are an important potential source of business instability. This means that changes in overall demand for goods and services can lead to fluctuations in economic output and employment levels. The Keynesian model suggests that government intervention in the form of fiscal policy, such as increased spending or tax cuts, can be used to stimulate aggregate demand during times of economic downturns.

Which of the Following Is a Major Insight of the Keynesian