Keynes's insight during the Great Depression was that:
A) investment spending was too great to support high employment.
B) consumption spending is detrimental to the economy.
C) the economy can be in both equilibrium and high unemployment.
D) the unemployment rate is not a good indicator of the true state of the economy.

Question

Quizplus · Accepted Answer

During the Great Depression, Keynes realized that even though the economy could be in a state of equilibrium, there could still be high levels of unemployment. He argued that government intervention and increased spending could help stimulate demand and employment. This led to the development of his theory of Keynesian economics. Choices A, B, and D are incorrect because they do not reflect Keynes's key insight during the Great Depression.

Keynes's Insight During the Great Depression Was That