Question

Which of the following statements correctly describes the view of Keynesian Economics?

A) Prices are rigid and it takes a long time for prices to adjust to the equilibrium level. The government should not
B) The government should not intervene in the economy, allowing market forces to determine prices and output levels.
C) Prices are flexible and adjust quickly to equilibrium, making government intervention unnecessary.
D) Prices are rigid, which necessitates active government intervention to stabilize the economy.

Answer 1

Keynesian Economics view is that prices are rigid, which necessitates active government intervention to stabilize the economy.

Step-by-step explanation:

The correct statement that describes the view of Keynesian Economics is D) Prices are rigid, which necessitates active government intervention to stabilize the economy.

Keynesian economics is a macroeconomic theory that suggests that during economic downturns, prices and wages do not adjust quickly enough to restore equilibrium. This view is based on the assumption that there can be significant market failures and that government intervention is necessary to stabilize the economy.