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:

Reality Therapy

A form of counseling that focuses on helping individuals take responsibility for improving their own lives by making better choices.

Responsible Catharsis

The process of releasing and thereby providing relief from strong or repressed emotions in a controlled and conscious manner.

Consciousness Raising

A process aimed at increasing awareness about oneself, one's environment, or social issues, often used in psychotherapy and social movements.

Stimulus Control

Stimulus control involves modifying the environment to manage the conditions that trigger certain behaviors, aiming to reduce or eliminate unwanted behaviors by controlling cues that prompt them.