Question

The Keynesian perspective applies when GDP and employment are...

a	high
b	low
c	doesn't matter
d	all of the above

Question 2 (1 point)

In general, when GDP is low, what will lowering interest rates do?

a	It will have very little effect on GDP or employment.
b	It will make money more plentiful and stimulate the economy, increasing GDP and employment.
c	It will increase inflation by making money more plentiful, and have little effect on GDP or employment.
d	It will make money less plentiful and suppress the economy, dereasing GDP and employment.

Question 3 (1 point)

In general, when GDP is high, what will lowering interest rates do?

a	It will make money less plentiful and suppress the economy, dereasing GDP and employment.
b	It will have very little effect on GDP or employment.
c	It will increase inflation by making money more plentiful, and have little effect on GDP or employment.
d	It will make money more plentiful and stimulate the economy, increasing GDP and employment.

Answer 1

Keynesian perspective is the demand side theory which states to increase government spending during recessions and controlling inflation during high growth so it applies in both cases hence option c is correct

2) When GDP is low lowering the interest rate will increase the money supply and will spur investment leading to growth in GDP and employment Hence option b is correct

3) when GDP is high lowering interest rate wouldn't have much impact in GDP since economic activity is already high and people are bullish but this will spur Consumption without affecting investment and causes inflation. Henec option c is correct