GMAT Exam  >  GMAT Questions  >  John Maynard Keynes and Friedrich Hayek, two ... Start Learning for Free
John Maynard Keynes and Friedrich Hayek, two prominent public figures associated with the Great Depression that started with the collapse of the stock market in 1929, both proposed different ways to restore the economy. Keynes, an economist from Cambridge, believed that the government should intervene in the situation, whereas Hayek, a professor from Austria, maintained that government involvement would be futile.
Although Hayek almost singlehandedly established the distinction between microeconomics and macroeconomics, engineering the transfer from classical economics to the more practical and application-oriented methodology of mathematical economics, his solution for emerging from the Great Depression was underestimated in the light of Keynes’ contribution to economic theory. In his 2012 study Keynes Hayek: The Clash that Defined Modern Economics, famous theorist Nicholas Wapshott traces the history of the applications of both men’s theories, giving unprecedented importance to Hayek’s work. Describing how the Keynesian vision dominated Western economic analyses until the 1970s, Wapshott surmises that the primary reason for the dominance of Keynes’ theory during the Depression was that Hayek’s solutions to the issue of economic recession were not politically viable. Hayek prescribed to the belief that, when left to its own devices, the market would eventually recover from its downturn and resume its equilibrium; this position was, not surprisingly, rejected by both the US and European political organizations, each seeking to prove its worth in reestablishing the economy’s prosperity.
Which of the following would the author most likely agree with?
  • a)
    Hayek’s theory was dominated by Keynes’ because Keynes had a better long-term vision than Hayek did.
  • b)
    Even though the reaction of the political organization could be anticipated, the underwhelming response received by Hayek in general was not indicative of the potential of his theory.
  • c)
    In addition to being politically viable, Hayek’s ideas were probably ahead of their time.  
  • d)
    Had Keynes also argued for limited government intervention, his ideas too would have been vehemently rejected by the political organizations.
  • e)
    In the light of the real reason that Hayek’s theory did not receive much appreciation, Keynes probably did not contribute as much to economics as he is credited for. 
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
John Maynard Keynes and Friedrich Hayek, two prominent public figures ...
Passage Analysis
Summary and Main Point
Pre-Thinking
This is an Inference question. The phrase “most likely agree” indicates the correct answer will follow closely from what is directly stated in the passage, but it may not itself be explicitly stated in the passage. Select the answer choice that is most strongly supported by specific facts mentioned in the passage.
Answer Choices
A
Hayek’s theory was dominated by Keynes’ because Keynes had a better long-term vision than Hayek did.
Incorrect: Out of Scope
 
The author does not state or imply anything about the long-term viability of Keynes’ theory.
B
Even though the reaction of the political organization could be anticipated, the underwhelming response received by Hayek in general was not indicative of the potential of his theory.
Correct
 
This choice is a combination of two opinions expressed by the author. The author states that the rejection of Hayek’s solution by the political organizations was not surprising. Hence, we can understand that their reaction could be anticipated. And we are also told that Hayek’s theory was “underestimated”. This means that the author believes that the merits of the theory weren’t fully appreciated.
C
In addition to being politically viable, Hayek’s ideas were probably ahead of their time.  
Incorrect: Out of Scope
 
The author does not comment on/suggest anything about the relevance of Hayek’s ideas with respect to their being ahead of their time.
D
Had Keynes also argued for limited government intervention, his ideas too would have been vehemently rejected by the political organizations.
Incorrect: Out of Scope
 
We have no basis to conclude whether Keynes would have received a similar response by the then political organizations. Also, the word “vehemently” makes this choice too extreme.
E
In the light of the real reason that Hayek’s theory did not receive much appreciation, Keynes probably did not contribute as much to economics as he is credited for. 
Incorrect: Out of Scope
 
Wapshott’s analysis, which the author uses to convey his/her point about Hayek’s theory being underestimated at the time of the Depression, just  tells us that the real reason that Hayek’s theory was overshadowed by Keynes’ was not that it had limited merits but because it was politically not viable. From this specific analysis, we cannot draw any inference about the merits of Keynes’ theory and certainly not about his overall contribution to economics.
View all questions of this test
Explore Courses for GMAT exam

Similar GMAT Doubts

John Maynard Keynes and Friedrich Hayek, two prominent public figures associated with the Great Depression that started with the collapse of the stock market in 1929, both proposed different ways to restore the economy. Keynes, an economist from Cambridge, believed that the government should intervene in the situation, whereas Hayek, a professor from Austria, maintained that government involvement would be futile.Although Hayek almost singlehandedly established the distinction between microeconomics and macroeconomics, engineering the transfer from classical economics to the more practical and application-oriented methodology of mathematical economics, his solution for emerging from the Great Depression was underestimated in the light of Keynes contribution to economic theory. In his 2012 study Keynes Hayek: The Clash that Defined Modern Economics, famous theorist Nicholas Wapshott traces the history of the applications of both mens theories, giving unprecedented importance to Hayeks work. Describing how the Keynesian vision dominated Western economic analyses until the 1970s, Wapshott surmises that the primary reason for the dominance of Keynes theory during the Depression was that Hayeks solutions to the issue of economic recession were not politically viable. Hayek prescribed to the belief that, when left to its own devices, the market would eventually recover from its downturn and resume its equilibrium; this position was, not surprisingly, rejected by both the US and European political organizations, each seeking to prove its worth in reestablishing the economys prosperity.According to the passage, which of the following was true of political parties at the time of the Great Depression?

John Maynard Keynes and Friedrich Hayek, two prominent public figures associated with the Great Depression that started with the collapse of the stock market in 1929, both proposed different ways to restore the economy. Keynes, an economist from Cambridge, believed that the government should intervene in the situation, whereas Hayek, a professor from Austria, maintained that government involvement would be futile.Although Hayek almost singlehandedly established the distinction between microeconomics and macroeconomics, engineering the transfer from classical economics to the more practical and application-oriented methodology of mathematical economics, his solution for emerging from the Great Depression was underestimated in the light of Keynes contribution to economic theory. In his 2012 study Keynes Hayek: The Clash that Defined Modern Economics, famous theorist Nicholas Wapshott traces the history of the applications of both mens theories, giving unprecedented importance to Hayeks work. Describing how the Keynesian vision dominated Western economic analyses until the 1970s, Wapshott surmises that the primary reason for the dominance of Keynes theory during the Depression was that Hayeks solutions to the issue of economic recession were not politically viable. Hayek prescribed to the belief that, when left to its own devices, the market would eventually recover from its downturn and resume its equilibrium; this position was, not surprisingly, rejected by both the US and European political organizations, each seeking to prove its worth in reestablishing the economys prosperity.The primary purpose of the passage is to

John Maynard Keynes and Friedrich Hayek, two prominent public figures associated with the Great Depression that started with the collapse of the stock market in 1929, both proposed different ways to restore the economy. Keynes, an economist from Cambridge, believed that the government should intervene in the situation, whereas Hayek, a professor from Austria, maintained that government involvement would be futile.Although Hayek almost singlehandedly established the distinction between microeconomics and macroeconomics, engineering the transfer from classical economics to the more practical and application-oriented methodology of mathematical economics, his solution for emerging from the Great Depression was underestimated in the light of Keynes contribution to economic theory. In his 2012 study Keynes Hayek: The Clash that Defined Modern Economics, famous theorist Nicholas Wapshott traces the history of the applications of both mens theories, giving unprecedented importance to Hayeks work. Describing how the Keynesian vision dominated Western economic analyses until the 1970s, Wapshott surmises that the primary reason for the dominance of Keynes theory during the Depression was that Hayeks solutions to the issue of economic recession were not politically viable. Hayek prescribed to the belief that, when left to its own devices, the market would eventually recover from its downturn and resume its equilibrium; this position was, not surprisingly, rejected by both the US and European political organizations, each seeking to prove its worth in reestablishing the economys prosperity.According to the passage, which of the following is true?

Top Courses for GMAT

John Maynard Keynes and Friedrich Hayek, two prominent public figures associated with the Great Depression that started with the collapse of the stock market in 1929, both proposed different ways to restore the economy. Keynes, an economist from Cambridge, believed that the government should intervene in the situation, whereas Hayek, a professor from Austria, maintained that government involvement would be futile.Although Hayek almost singlehandedly established the distinction between microeconomics and macroeconomics, engineering the transfer from classical economics to the more practical and application-oriented methodology of mathematical economics, his solution for emerging from the Great Depression was underestimated in the light of Keynes’ contribution to economic theory. In his 2012 study Keynes Hayek: The Clash that Defined Modern Economics, famous theorist Nicholas Wapshott traces the history of the applications of both men’s theories, giving unprecedented importance to Hayek’s work. Describing how the Keynesian vision dominated Western economic analyses until the 1970s, Wapshott surmises that the primary reason for the dominance of Keynes’ theory during the Depression was that Hayek’s solutions to the issue of economic recession were not politically viable. Hayek prescribed to the belief that, when left to its own devices, the market would eventually recover from its downturn and resume its equilibrium; this position was, not surprisingly, rejected by both the US and European political organizations, each seeking to prove its worth in reestablishing the economy’s prosperity.Which of the following would the author most likely agree with?a)Hayek’s theory was dominated by Keynes’ because Keynes had a better long-term vision than Hayek did.b)Even though the reaction of the political organization could be anticipated, the underwhelming response received by Hayek in general was not indicative of the potential of his theory.c)In addition to being politically viable, Hayek’s ideas were probably ahead of their time.d)Had Keynes also argued for limited government intervention, his ideas too would have been vehemently rejected by the political organizations.e)In the light of the real reason that Hayek’s theory did not receive much appreciation, Keynes probably did not contribute as much to economics as he is credited for.Correct answer is option 'B'. Can you explain this answer?
Question Description
John Maynard Keynes and Friedrich Hayek, two prominent public figures associated with the Great Depression that started with the collapse of the stock market in 1929, both proposed different ways to restore the economy. Keynes, an economist from Cambridge, believed that the government should intervene in the situation, whereas Hayek, a professor from Austria, maintained that government involvement would be futile.Although Hayek almost singlehandedly established the distinction between microeconomics and macroeconomics, engineering the transfer from classical economics to the more practical and application-oriented methodology of mathematical economics, his solution for emerging from the Great Depression was underestimated in the light of Keynes’ contribution to economic theory. In his 2012 study Keynes Hayek: The Clash that Defined Modern Economics, famous theorist Nicholas Wapshott traces the history of the applications of both men’s theories, giving unprecedented importance to Hayek’s work. Describing how the Keynesian vision dominated Western economic analyses until the 1970s, Wapshott surmises that the primary reason for the dominance of Keynes’ theory during the Depression was that Hayek’s solutions to the issue of economic recession were not politically viable. Hayek prescribed to the belief that, when left to its own devices, the market would eventually recover from its downturn and resume its equilibrium; this position was, not surprisingly, rejected by both the US and European political organizations, each seeking to prove its worth in reestablishing the economy’s prosperity.Which of the following would the author most likely agree with?a)Hayek’s theory was dominated by Keynes’ because Keynes had a better long-term vision than Hayek did.b)Even though the reaction of the political organization could be anticipated, the underwhelming response received by Hayek in general was not indicative of the potential of his theory.c)In addition to being politically viable, Hayek’s ideas were probably ahead of their time.d)Had Keynes also argued for limited government intervention, his ideas too would have been vehemently rejected by the political organizations.e)In the light of the real reason that Hayek’s theory did not receive much appreciation, Keynes probably did not contribute as much to economics as he is credited for.Correct answer is option 'B'. Can you explain this answer? for GMAT 2024 is part of GMAT preparation. The Question and answers have been prepared according to the GMAT exam syllabus. Information about John Maynard Keynes and Friedrich Hayek, two prominent public figures associated with the Great Depression that started with the collapse of the stock market in 1929, both proposed different ways to restore the economy. Keynes, an economist from Cambridge, believed that the government should intervene in the situation, whereas Hayek, a professor from Austria, maintained that government involvement would be futile.Although Hayek almost singlehandedly established the distinction between microeconomics and macroeconomics, engineering the transfer from classical economics to the more practical and application-oriented methodology of mathematical economics, his solution for emerging from the Great Depression was underestimated in the light of Keynes’ contribution to economic theory. In his 2012 study Keynes Hayek: The Clash that Defined Modern Economics, famous theorist Nicholas Wapshott traces the history of the applications of both men’s theories, giving unprecedented importance to Hayek’s work. Describing how the Keynesian vision dominated Western economic analyses until the 1970s, Wapshott surmises that the primary reason for the dominance of Keynes’ theory during the Depression was that Hayek’s solutions to the issue of economic recession were not politically viable. Hayek prescribed to the belief that, when left to its own devices, the market would eventually recover from its downturn and resume its equilibrium; this position was, not surprisingly, rejected by both the US and European political organizations, each seeking to prove its worth in reestablishing the economy’s prosperity.Which of the following would the author most likely agree with?a)Hayek’s theory was dominated by Keynes’ because Keynes had a better long-term vision than Hayek did.b)Even though the reaction of the political organization could be anticipated, the underwhelming response received by Hayek in general was not indicative of the potential of his theory.c)In addition to being politically viable, Hayek’s ideas were probably ahead of their time.d)Had Keynes also argued for limited government intervention, his ideas too would have been vehemently rejected by the political organizations.e)In the light of the real reason that Hayek’s theory did not receive much appreciation, Keynes probably did not contribute as much to economics as he is credited for.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for GMAT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for John Maynard Keynes and Friedrich Hayek, two prominent public figures associated with the Great Depression that started with the collapse of the stock market in 1929, both proposed different ways to restore the economy. Keynes, an economist from Cambridge, believed that the government should intervene in the situation, whereas Hayek, a professor from Austria, maintained that government involvement would be futile.Although Hayek almost singlehandedly established the distinction between microeconomics and macroeconomics, engineering the transfer from classical economics to the more practical and application-oriented methodology of mathematical economics, his solution for emerging from the Great Depression was underestimated in the light of Keynes’ contribution to economic theory. In his 2012 study Keynes Hayek: The Clash that Defined Modern Economics, famous theorist Nicholas Wapshott traces the history of the applications of both men’s theories, giving unprecedented importance to Hayek’s work. Describing how the Keynesian vision dominated Western economic analyses until the 1970s, Wapshott surmises that the primary reason for the dominance of Keynes’ theory during the Depression was that Hayek’s solutions to the issue of economic recession were not politically viable. Hayek prescribed to the belief that, when left to its own devices, the market would eventually recover from its downturn and resume its equilibrium; this position was, not surprisingly, rejected by both the US and European political organizations, each seeking to prove its worth in reestablishing the economy’s prosperity.Which of the following would the author most likely agree with?a)Hayek’s theory was dominated by Keynes’ because Keynes had a better long-term vision than Hayek did.b)Even though the reaction of the political organization could be anticipated, the underwhelming response received by Hayek in general was not indicative of the potential of his theory.c)In addition to being politically viable, Hayek’s ideas were probably ahead of their time.d)Had Keynes also argued for limited government intervention, his ideas too would have been vehemently rejected by the political organizations.e)In the light of the real reason that Hayek’s theory did not receive much appreciation, Keynes probably did not contribute as much to economics as he is credited for.Correct answer is option 'B'. Can you explain this answer?.
Solutions for John Maynard Keynes and Friedrich Hayek, two prominent public figures associated with the Great Depression that started with the collapse of the stock market in 1929, both proposed different ways to restore the economy. Keynes, an economist from Cambridge, believed that the government should intervene in the situation, whereas Hayek, a professor from Austria, maintained that government involvement would be futile.Although Hayek almost singlehandedly established the distinction between microeconomics and macroeconomics, engineering the transfer from classical economics to the more practical and application-oriented methodology of mathematical economics, his solution for emerging from the Great Depression was underestimated in the light of Keynes’ contribution to economic theory. In his 2012 study Keynes Hayek: The Clash that Defined Modern Economics, famous theorist Nicholas Wapshott traces the history of the applications of both men’s theories, giving unprecedented importance to Hayek’s work. Describing how the Keynesian vision dominated Western economic analyses until the 1970s, Wapshott surmises that the primary reason for the dominance of Keynes’ theory during the Depression was that Hayek’s solutions to the issue of economic recession were not politically viable. Hayek prescribed to the belief that, when left to its own devices, the market would eventually recover from its downturn and resume its equilibrium; this position was, not surprisingly, rejected by both the US and European political organizations, each seeking to prove its worth in reestablishing the economy’s prosperity.Which of the following would the author most likely agree with?a)Hayek’s theory was dominated by Keynes’ because Keynes had a better long-term vision than Hayek did.b)Even though the reaction of the political organization could be anticipated, the underwhelming response received by Hayek in general was not indicative of the potential of his theory.c)In addition to being politically viable, Hayek’s ideas were probably ahead of their time.d)Had Keynes also argued for limited government intervention, his ideas too would have been vehemently rejected by the political organizations.e)In the light of the real reason that Hayek’s theory did not receive much appreciation, Keynes probably did not contribute as much to economics as he is credited for.Correct answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for GMAT. Download more important topics, notes, lectures and mock test series for GMAT Exam by signing up for free.
Here you can find the meaning of John Maynard Keynes and Friedrich Hayek, two prominent public figures associated with the Great Depression that started with the collapse of the stock market in 1929, both proposed different ways to restore the economy. Keynes, an economist from Cambridge, believed that the government should intervene in the situation, whereas Hayek, a professor from Austria, maintained that government involvement would be futile.Although Hayek almost singlehandedly established the distinction between microeconomics and macroeconomics, engineering the transfer from classical economics to the more practical and application-oriented methodology of mathematical economics, his solution for emerging from the Great Depression was underestimated in the light of Keynes’ contribution to economic theory. In his 2012 study Keynes Hayek: The Clash that Defined Modern Economics, famous theorist Nicholas Wapshott traces the history of the applications of both men’s theories, giving unprecedented importance to Hayek’s work. Describing how the Keynesian vision dominated Western economic analyses until the 1970s, Wapshott surmises that the primary reason for the dominance of Keynes’ theory during the Depression was that Hayek’s solutions to the issue of economic recession were not politically viable. Hayek prescribed to the belief that, when left to its own devices, the market would eventually recover from its downturn and resume its equilibrium; this position was, not surprisingly, rejected by both the US and European political organizations, each seeking to prove its worth in reestablishing the economy’s prosperity.Which of the following would the author most likely agree with?a)Hayek’s theory was dominated by Keynes’ because Keynes had a better long-term vision than Hayek did.b)Even though the reaction of the political organization could be anticipated, the underwhelming response received by Hayek in general was not indicative of the potential of his theory.c)In addition to being politically viable, Hayek’s ideas were probably ahead of their time.d)Had Keynes also argued for limited government intervention, his ideas too would have been vehemently rejected by the political organizations.e)In the light of the real reason that Hayek’s theory did not receive much appreciation, Keynes probably did not contribute as much to economics as he is credited for.Correct answer is option 'B'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of John Maynard Keynes and Friedrich Hayek, two prominent public figures associated with the Great Depression that started with the collapse of the stock market in 1929, both proposed different ways to restore the economy. Keynes, an economist from Cambridge, believed that the government should intervene in the situation, whereas Hayek, a professor from Austria, maintained that government involvement would be futile.Although Hayek almost singlehandedly established the distinction between microeconomics and macroeconomics, engineering the transfer from classical economics to the more practical and application-oriented methodology of mathematical economics, his solution for emerging from the Great Depression was underestimated in the light of Keynes’ contribution to economic theory. In his 2012 study Keynes Hayek: The Clash that Defined Modern Economics, famous theorist Nicholas Wapshott traces the history of the applications of both men’s theories, giving unprecedented importance to Hayek’s work. Describing how the Keynesian vision dominated Western economic analyses until the 1970s, Wapshott surmises that the primary reason for the dominance of Keynes’ theory during the Depression was that Hayek’s solutions to the issue of economic recession were not politically viable. Hayek prescribed to the belief that, when left to its own devices, the market would eventually recover from its downturn and resume its equilibrium; this position was, not surprisingly, rejected by both the US and European political organizations, each seeking to prove its worth in reestablishing the economy’s prosperity.Which of the following would the author most likely agree with?a)Hayek’s theory was dominated by Keynes’ because Keynes had a better long-term vision than Hayek did.b)Even though the reaction of the political organization could be anticipated, the underwhelming response received by Hayek in general was not indicative of the potential of his theory.c)In addition to being politically viable, Hayek’s ideas were probably ahead of their time.d)Had Keynes also argued for limited government intervention, his ideas too would have been vehemently rejected by the political organizations.e)In the light of the real reason that Hayek’s theory did not receive much appreciation, Keynes probably did not contribute as much to economics as he is credited for.Correct answer is option 'B'. Can you explain this answer?, a detailed solution for John Maynard Keynes and Friedrich Hayek, two prominent public figures associated with the Great Depression that started with the collapse of the stock market in 1929, both proposed different ways to restore the economy. Keynes, an economist from Cambridge, believed that the government should intervene in the situation, whereas Hayek, a professor from Austria, maintained that government involvement would be futile.Although Hayek almost singlehandedly established the distinction between microeconomics and macroeconomics, engineering the transfer from classical economics to the more practical and application-oriented methodology of mathematical economics, his solution for emerging from the Great Depression was underestimated in the light of Keynes’ contribution to economic theory. In his 2012 study Keynes Hayek: The Clash that Defined Modern Economics, famous theorist Nicholas Wapshott traces the history of the applications of both men’s theories, giving unprecedented importance to Hayek’s work. Describing how the Keynesian vision dominated Western economic analyses until the 1970s, Wapshott surmises that the primary reason for the dominance of Keynes’ theory during the Depression was that Hayek’s solutions to the issue of economic recession were not politically viable. Hayek prescribed to the belief that, when left to its own devices, the market would eventually recover from its downturn and resume its equilibrium; this position was, not surprisingly, rejected by both the US and European political organizations, each seeking to prove its worth in reestablishing the economy’s prosperity.Which of the following would the author most likely agree with?a)Hayek’s theory was dominated by Keynes’ because Keynes had a better long-term vision than Hayek did.b)Even though the reaction of the political organization could be anticipated, the underwhelming response received by Hayek in general was not indicative of the potential of his theory.c)In addition to being politically viable, Hayek’s ideas were probably ahead of their time.d)Had Keynes also argued for limited government intervention, his ideas too would have been vehemently rejected by the political organizations.e)In the light of the real reason that Hayek’s theory did not receive much appreciation, Keynes probably did not contribute as much to economics as he is credited for.Correct answer is option 'B'. Can you explain this answer? has been provided alongside types of John Maynard Keynes and Friedrich Hayek, two prominent public figures associated with the Great Depression that started with the collapse of the stock market in 1929, both proposed different ways to restore the economy. Keynes, an economist from Cambridge, believed that the government should intervene in the situation, whereas Hayek, a professor from Austria, maintained that government involvement would be futile.Although Hayek almost singlehandedly established the distinction between microeconomics and macroeconomics, engineering the transfer from classical economics to the more practical and application-oriented methodology of mathematical economics, his solution for emerging from the Great Depression was underestimated in the light of Keynes’ contribution to economic theory. In his 2012 study Keynes Hayek: The Clash that Defined Modern Economics, famous theorist Nicholas Wapshott traces the history of the applications of both men’s theories, giving unprecedented importance to Hayek’s work. Describing how the Keynesian vision dominated Western economic analyses until the 1970s, Wapshott surmises that the primary reason for the dominance of Keynes’ theory during the Depression was that Hayek’s solutions to the issue of economic recession were not politically viable. Hayek prescribed to the belief that, when left to its own devices, the market would eventually recover from its downturn and resume its equilibrium; this position was, not surprisingly, rejected by both the US and European political organizations, each seeking to prove its worth in reestablishing the economy’s prosperity.Which of the following would the author most likely agree with?a)Hayek’s theory was dominated by Keynes’ because Keynes had a better long-term vision than Hayek did.b)Even though the reaction of the political organization could be anticipated, the underwhelming response received by Hayek in general was not indicative of the potential of his theory.c)In addition to being politically viable, Hayek’s ideas were probably ahead of their time.d)Had Keynes also argued for limited government intervention, his ideas too would have been vehemently rejected by the political organizations.e)In the light of the real reason that Hayek’s theory did not receive much appreciation, Keynes probably did not contribute as much to economics as he is credited for.Correct answer is option 'B'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice John Maynard Keynes and Friedrich Hayek, two prominent public figures associated with the Great Depression that started with the collapse of the stock market in 1929, both proposed different ways to restore the economy. Keynes, an economist from Cambridge, believed that the government should intervene in the situation, whereas Hayek, a professor from Austria, maintained that government involvement would be futile.Although Hayek almost singlehandedly established the distinction between microeconomics and macroeconomics, engineering the transfer from classical economics to the more practical and application-oriented methodology of mathematical economics, his solution for emerging from the Great Depression was underestimated in the light of Keynes’ contribution to economic theory. In his 2012 study Keynes Hayek: The Clash that Defined Modern Economics, famous theorist Nicholas Wapshott traces the history of the applications of both men’s theories, giving unprecedented importance to Hayek’s work. Describing how the Keynesian vision dominated Western economic analyses until the 1970s, Wapshott surmises that the primary reason for the dominance of Keynes’ theory during the Depression was that Hayek’s solutions to the issue of economic recession were not politically viable. Hayek prescribed to the belief that, when left to its own devices, the market would eventually recover from its downturn and resume its equilibrium; this position was, not surprisingly, rejected by both the US and European political organizations, each seeking to prove its worth in reestablishing the economy’s prosperity.Which of the following would the author most likely agree with?a)Hayek’s theory was dominated by Keynes’ because Keynes had a better long-term vision than Hayek did.b)Even though the reaction of the political organization could be anticipated, the underwhelming response received by Hayek in general was not indicative of the potential of his theory.c)In addition to being politically viable, Hayek’s ideas were probably ahead of their time.d)Had Keynes also argued for limited government intervention, his ideas too would have been vehemently rejected by the political organizations.e)In the light of the real reason that Hayek’s theory did not receive much appreciation, Keynes probably did not contribute as much to economics as he is credited for.Correct answer is option 'B'. Can you explain this answer? tests, examples and also practice GMAT tests.
Explore Courses for GMAT exam

Top Courses for GMAT

Explore Courses
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev