In Developing His Macroeconomic Theory, Keynes

question 115

Multiple Choice

In developing his macroeconomic theory, Keynes

• A) focused primarily on how potential GDP can change over time.
• B) focused on how fiscal policy can change potential output.
• C) was concerned with output gaps and how they could be eliminated.
• D) was primarily concerned with the supply-side of the economy and how producer behavior led to output gaps.

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Definitions:

Equilibrium Quantity

The quantity of goods or services that is supplied and demanded at the equilibrium price, where the market clears.

Tax Per Unit

A fixed amount of tax applied to a product or service, based on the quantity sold, rather than the value.

Tax Incidence

The study of who ultimately pays for and bears the cost of taxation, whether it be consumers, producers, or others.

Tax Incidence

The analysis of the effect of a particular tax on the distribution of economic welfare among entities like consumers, producers, and the government.