Keynesian Analysis Indicates That an Unexpected Decline in Aggregate Demand

question 59

Multiple Choice

Keynesian analysis indicates that an unexpected decline in aggregate demand will lead to

• A) a reduction in inventories and an expansion in employment.
• B) an increase in inventories and a reduction in output.
• C) lower interest rates, which will stimulate aggregate demand and keep the economy at full employment.
• D) a lower price level, which will quickly guide the economy to full-employment equilibrium.

---

Definitions:

Passive Reflection

The act of contemplating or pondering without actively engaging in problem-solving or applying critical thinking.

Previously Unconscious

Refers to thoughts, feelings, or desires that were not in an individual's conscious awareness but have since been brought to attention.

Free Association

A psychoanalytic technique in which a patient speaks freely about their thoughts, feelings, or images, to uncover unconscious desires or conflicts.

Therapeutic Success

The achievement of desired outcomes or improvements in symptoms and quality of life through any form of therapy or treatment.