As contrasted to the mainstream view, Keynesian economists believe that ________ than mainstream economists believe.

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The question asks us to compare Keynesian economists with the mainstream view and to identify how their beliefs differ. The provided option states: 'the multiplier effect is larger.' To analyze this, consider what the multiplier represents: the total change in national income resulting from a change in autonomous spending (for example, government spending or investment). Keynesian theory emphasizes that fiscal stimulus can have a magnified impact on aggregate demand because of reinforcing spending cycles, underutilized capacity, and wage/rprice rigidities that prevent immediate returns to equilibrium. In contrast, some mainstream or classical viewpoints tend to be more skeptical about the size of the multiplier, arguing that crowding out, higher interest rates, or Ricardian equivalence could dampen the impact of government spending. Therefore, the Keynesian position that fiscal multipliers are larger than mainstream estimates aligns with their core emphasis on demand-side stabilization and underused resources, especially during downturns. Since no other options are provided to evaluate, this single choice can be justified on the basis of the Keynesian stance on fiscal effectiveness and aggregate demand responses.

As contrasted to the mainstream view, Keynesian economists believe that ________ than mainstream economists believe.

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As contrasted to the mainstream view, Keynesian economists believe that ________ than mainstream economists believe.

View Explanation

Log in for full answers

Similar Questions

In theory, an initial injection of spending of $1 million by a government can result in an increase in real Gross Domestic Product (GDP) greater than $1 million due to

An initial increase in government spending of $100 billion can create more than $100 billion of spending throughout the economy by what economists call the __________ effect.

35. Refer to the figure. If the aggregate demand curve shifts from AD2 to AD1, the multiplier effect on real GDP will be a decrease from A. Q3 to Q1. B. Q2 to Q4. C. Q2 to Q1. D. Q3 to Q4.

55. If households in the economy save more of any extra income that they earn, then the multiplier effect will A. increase. B. decrease. C. be unaffected. D. become less than 1.0.

An increase in the MPC

Assume that MPC is the one you calculated in Question 5. Transfer payments increase by 40,000.00 units. As a result, the real GDP will change by [Fill in the blank], units.

Suppose the marginal propensity to consume is 0.75. If businesses become more optimistic about the future and raise their investment by $10, the short-run equilibrium output will _____________________ and consumption will _________________.

More Practical Tools for Students Powered by AI Study Helper

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Suppose the marginal propensity to consume is 0.75. If businesses become more optimistic about the future and raise their investment by $10, the short-run equilibrium output will _____ and consumption will _.