Within the Keynesian Model, When Total Spending Is Less Than

question 93

Multiple Choice

Within the Keynesian model, when total spending is less than the full-employment level of output, firms will

• A) continue to produce the current level of output.
• B) cut production to reduce their inventory accumulation.
• C) expand production to reduce their inventory accumulation.
• D) cut production to build inventories.

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Definitions:

Net Sales

Company sales revenue post deduction of returns, allowances for imperfections or absences, and discounts.

Depreciation

An accounting method of allocating the cost of a tangible asset over its useful life to account for declines in value over time.

Plant Assets

Durable physical assets employed in the running of a business, designed for long-term use and not for being sold off.

Accrued Expenses

Expenses that have been incurred but not yet paid or recorded in the company's financial statements.