In the Simple Keynesian Model, If Desired Investment Is Greater

question 226

Multiple Choice

In the simple Keynesian model, if desired investment is greater than desired saving:

• A) the multiplier effect will move the economy to a lower income level.
• B) income and output will rise.
• C) interest rates will fall.
• D) actual savings will fall as the economy moves to a lower output level.

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Definitions:

Checking Accounts

Bank accounts that allow for easy access to funds through checks, debit cards, and electronic transfers, used for daily transactions.

Open Market Operations

Central bank activities involving buying and selling government securities in the marketplace to influence the money supply and interest rates.

Money Supply

The all-inclusive measure of monetary resources present in an economy at a specific juncture.

Interest Rates

The cost of borrowing money or the return for investing, typically expressed as a percentage of the principal, varying over time based on economic conditions.