Question

John Maynard Keynes argued that a prolonged economic slump could arise when there is a macroeconomic equilibrium in which

Answer 1

In macroeconomics, a prolonged economic slump can occur when there is an imbalance between supply and demand, leading to high unemployment and recession. This is known as Keynes' law.

Step-by-step explanation:

In macroeconomics, John Maynard Keynes argued that a prolonged economic slump could arise when there is a macroeconomic equilibrium in which supply and demand are not balanced. Keynes' law states that an economic downturn can occur when there is a deficiency in aggregate demand, leading to high unemployment and recession. This is because even if supply always creates enough demand, a recession is a situation where the economy as a whole is shrinking in size, with business failures outnumbering successes.