Which of the following is true?

Question

Quizplus · Accepted Answer

Keynes asked this question in order to challenge the classical economic theory that stated that the economy would automatically stabilize itself through supply and demand. He argued that this model had failed during the Great Depression and that government intervention was necessary to recover economic stability.

Answer: B
 This is the basic principle of the Keynesian theory of demand-side economics. Keynes believed that government intervention was necessary during times of economic recession or depression to stimulate demand and bring the economy back to full employment.

Answer: C and D are incorrect. 
 Keynes believed that prices and wages were sticky, meaning that they did not adjust quickly to changes in supply and demand. He also believed that the economy was not inherently stable and required government intervention to maintain stability.

Which of the Following Is True