Within the Keynesian Model, If the Output of an Economy

question 26

Multiple Choice

Within the Keynesian model, if the output of an economy is less than the full-employment level, then

• A) a reduction in government expenditures will direct the economy back to full-employment equilibrium.
• B) a reduction in wage rates and resource prices will quickly restore full-employment equilibrium.
• C) a reduction in the real interest rate will soon restore full-employment equilibrium.
• D) output will tend to remain below full-employment capacity unless aggregate expenditures increase.

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Definitions:

Changing Conditions

The dynamic nature of situations, environments, or circumstances that are in a state of flux.

Recognition Rewards

Acknowledgments or incentives given to individuals or groups for their achievements and contributions, often used as a motivational strategy in various settings.

Appropriate Culture

A culture or environment that is suitable and fitting for its members, respecting their needs, values, and norms.

Law of Probability

A mathematical principle that quantifies the likelihood of events occurring, based on the ratio of favorable outcomes to the total number of possible outcomes.