In the Model with Keynesian Sticky Wages and Prices, a Decrease

question 54

Multiple Choice

In the model with Keynesian sticky wages and prices, a decrease in government spending may decrease output more than one-for-one because

• A)the decrease in government spending may worsen inefficiency.
• B)more government spending is always desirable.
• C)the First Welfare Theorem holds.
• D)government spending changes the behaviour of the monetary authority.
• E)consumption increases.

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Definitions:

Secondary Appraisal

The assessment of one's ability to cope with or manage the consequences of a stressful event after recognizing it as a threat.

Primary Appraisal

The initial evaluation process where an individual assesses the significance of an event or situation as stressful, positive, or irrelevant.

Background Emotion

Subtle and sustained emotional states that influence mood and perception without immediate awareness.

Social Emotion

Emotions that arise in the context of social interactions or relationships, often involving feelings that are influenced by the perceptions, thoughts, or behaviors of others.