Within the Keynesian Aggregate Expenditure-Output Model, If an Economy Operates

question 104

Multiple Choice

Within the Keynesian aggregate expenditure-output model, if an economy operates below full employment:

• A) a reduction in wage rates and resource prices will soon restore full-employment equilibrium.
• B) a reduction in the real interest rate will soon restore full-employment equilibrium.
• C) an increase in the real interest rate will soon restore full-employment equilibrium.
• D) the economy may remain below full employment unless aggregate expenditures increase.

---

Definitions:

Horizontal Merger

A business consolidation that occurs between firms operating in the same industry, often aiming to increase market share.

Conglomerate Merger

A union between firms that are involved in totally unrelated business activities.

Vertical Merger

A merger between companies in the same industry but at different stages of the production process, aiming at creating efficiencies or reducing costs.

Consolidation

The process of combining multiple accounts or businesses into a single entity, often for the purpose of simplifying financial statements or achieving operational efficiencies.