Question

Keynes argued that: Group of answer choices the distinction between the short run and the long run is irrelevant. the long run is a more important policy concern than the short run. the short run is a more important policy concern than the long run. both the short run and the long run are equally important.

Answer 1

Answer:

C. the short run is a more important policy concern than the long run.

Explanation:

John Maynard Keynes was a British economist born on the 5th of June, 1883 in Cambridge, England. He was famous for his brilliant ideas on government economic policy and macroeconomics which is known as the Keynesian theory. He later died on the 23rd of April, 1946 in Sussex, England.

According to the Keynesian Transmission Mechanism, the link between the money market and the goods and services market is indirect; because at first, short-term interest rates are lowered by an increase in the supply of reserves and then with time both the bond and bank loan rates falls. Consequently, this would make investments and aggregate demand (AD curve shifts rightward) to rise or increase as a result of the low cost of capital for investors and by extension it boost the level of production or quantity of output (real gross domestic product or Real GDP). This ultimately implies that, the interest rates affects the real and costs of capital (monetary changes).

Hence, Keynes argued that the short run is a more important policy concern than the long run and he was quoted as saying, in the long-run we're all dead.