Suppose That as a Result of Expectations of Lower Sales

question 19

Multiple Choice

Suppose that as a result of expectations of lower sales in the future,a decrease in autonomous business investment causes aggregate demand to shift from AD₀ to AD₁ as shown in Figure 10.1.Which of the following statements is true?

• A)According to Keynesian theory,the economy will quickly adjust back to full employment.
• B)According to Keynesian theory,additional decreases in aggregate demand will occur.
• C)In the absence of any additional decreases in investment,the equilibrium will remain at Q₁ indefinitely.
• D)The GDP gap will be eliminated by the multiplier.

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Definitions:

Family

Two or more people related by blood, marriage, or adoption. The family may take many forms, ranging from a single parent with one or more children, to a married couple or polygamous spouses with or without offspring, to several generations of parents and their children.

Human Societies

Groups of individuals who live together in organized communities, sharing common cultural, economic, and social structures and values.

Marriage

A legally and socially sanctioned union between individuals that establishes rights and obligations between them.

Family

A social unit consisting of parents and their children, considered as a group, whether dwelling together or not.