In the Basic Keynesian Model, an Increase in Transfer Payments

question 92

Multiple Choice

In the basic Keynesian model, an increase in transfer payments:

• A)reduces short-run equilibrium output.
• B)increases short-run equilibrium output.
• C)reduces potential output.
• D)increases potential output.

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Definitions:

Financial Leverage

The use of borrowed funds to increase the potential return on investment.

General Journal

A comprehensive journal that records the initial data for all different types of financial transactions.

Ledger

An accounting book or computer file used for recording and totaling economic transactions measured in terms of a monetary unit, by account.

Posting

The process of recording amounts as debits or credits in the accounts of a company's general ledger.