Keynesian Analysis Implies That Potential Output and Price Stability Can

question 97

Multiple Choice

Keynesian analysis implies that potential output and price stability can be achieved if

• A) the federal budget is balanced annually.
• B) marginal tax rates are kept low so the incentive to produce will be strong.
• C) aggregate demand is equal to the economy's full-employment rate of output.
• D) current saving exceeds the level of investment.

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Definitions:

Compromise

An agreement or a settlement of a dispute that is reached by each side making concessions.

Revolutionary War

The war of independence fought by the Thirteen American Colonies against British rule from 1775 to 1783, resulting in the founding of the United States of America.

Violence

The use of physical force with the intent to harm, damage, or kill someone or something.

Virginia

A U.S. state located in the Southeastern and Mid-Atlantic regions, notable for its significant historical contributions to the country, including being the site of the first permanent English settlement in America at Jamestown.