Within the Keynesian Model, If the Output of an Economy

question 26

Multiple Choice

Within the Keynesian model, if the output of an economy is less than the full-employment level, then

• A) a reduction in government expenditures will direct the economy back to full-employment equilibrium.
• B) a reduction in wage rates and resource prices will quickly restore full-employment equilibrium.
• C) a reduction in the real interest rate will soon restore full-employment equilibrium.
• D) output will tend to remain below full-employment capacity unless aggregate expenditures increase.

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Definitions:

Normal Time

The amount of time that a task should take under normal working conditions, often used in time studies for setting standard times in manufacturing or work scheduling.

Average Observed Time

The mean time recorded across multiple observations or instances of a specific task or process.

Labour Standards

Regulations and criteria relating to the treatment, pay, and conditions of work for employees.

Labour Content

The total amount of work or effort, measured in hours or costs, required to produce a good or service.