Asked by Giovanni Magana on May 18, 2024

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Keynesian economists (as opposed to monetarist economists) argue that

A) the economy will quickly return to equilibrium via natural forces.
B) the government should use macro policy to keep the economy from getting too far from full employment equilibrium.
C) monetary policy should be used according to strict rules.
D) Keynesian economists argue all of these statements.

Keynesian Economists

Economists who believe that demand-side factors are critical in determining the level of economic activity, advocating for government intervention to manage demand.

Macroeconomic Policy

Strategies and actions taken by a government or central bank to regulate and control the economy as a whole, including fiscal and monetary policies.

Full Employment

When a society’s resources are all being used with maximum efficiency.

  • Understand the distinctions between Keynesian and monetarist perspectives regarding economic equilibrium and policy measures.
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Grace Tiofanny SimanjuntakMay 19, 2024
Final Answer :
B
Explanation :
Keynesian economists argue that the economy is not self-correcting and can experience prolonged periods of unemployment and low economic growth. Therefore, they advocate for government intervention through fiscal policy (like government spending and taxation) and monetary policy (like adjusting interest rates) to stabilize the economy and keep it from deviating too far from full employment equilibrium. Monetarist economists, on the other hand, prioritize using monetary policy to control inflation and advocate for a more hands-off approach to government intervention in the economy.