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In the Keynesian Model, If Aggregate Expenditures Exceed Aggregate Output

question 83

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In the Keynesian model, if aggregate expenditures exceed aggregate output and inventories of firms fall, then the aggregate output and the business sector could be expected to:


Definitions:

Marginal Revenue

The extra revenue gained from the sale of an additional unit of a product or service.

Perfect Competition

A market structure characterized by many buyers and sellers, freedom of entry and exit, and a homogeneous product.

Perfectly Elastic

A situation in economic theory where the quantity demanded or supplied of a good changes infinitely in response to any change in price.

Demand Curve

A diagram depicting how the demand for an item varies with its price, generally characterized by a downward trajectory.

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