Within the Framework of the Keynesian Model, If Aggregate Expenditures

question 33

Multiple Choice

Within the framework of the Keynesian model, if aggregate expenditures exceed aggregate output, then:

• A) the inventories of firms would decline, and the firms would expand output in order to restore their inventories to desired levels.
• B) the inventories of firms would increase, and the firms would reduce output until inventories were cut back to the desired level.
• C) the current level of income would persist in the future.
• D) firms would reduce their investment, and the economy would fall into a recession.

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Definitions:

Protoplasmic Protrusions

Extensions of the cell body, such as pseudopodia, used for movement and feeding in some unicellular organisms.

Scientific Theory

In science, a widely accepted explanation supported by a large body of observations and experiments. A scientific theory relates facts that appear unrelated; it predicts new facts and suggests new relationships. Compare with hypothesis.

Unchangeable

A term describing something that cannot be altered or modified.

Hypotheses

Proposed explanations for a phenomenon, made as a starting point for further investigation.