Which of the Following Describes the Keynesian Approach to the Business

question 117

Multiple Choice

Which of the following describes the Keynesian approach to the business cycle?

• A)III only
• B)II and III
• C)I only
• D)I and II

---

Definitions:

Multiplier Effect

The relative change in net income resulting from an addition or reduction in expenditure.

Crowding out

A situation in economics where increased government spending displaces private sector spending, either through higher taxes, higher interest rates, or borrowing.

Government Expenditures

The spending by the government sector on goods and services, including public services and public investment.

Multiplier

An economic factor that quantifies the effect of a change in fiscal or monetary policy on the overall economy, such as how an increase in government spending can lead to a larger increase in national income.