Assume the Economy Is in Short-Run Equilibrium at a Real

question 5

Multiple Choice

Assume the economy is in short-run equilibrium at a real GDP below its potential real GDP. According to Keynesian theory, which of the following policies should be followed?

• A) The Federal Reserve should increase the money supply.
• B) The federal government should increase spending.
• C) The federal government should do nothing because the economy will self correct to potential real GDP.
• D) All of the above.

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Definitions:

Organizational Performance

Refers to how well an organization achieves its market objectives and goals.

Patience

The capacity to accept or tolerate delay, problems, or suffering without becoming annoyed or anxious.

Planning

The process of making detailed strategies and arrangements for achieving specific goals or completing tasks.

Stakeholder Model

A framework used in business that identifies and addresses the interests and concerns of individuals and groups affected by the organization's actions.