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.

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Definitions:

Interest

The cost of borrowing money, typically expressed as a percentage of the amount borrowed over a specific period of time.

Data Mining

The process of discovering patterns and knowledge from large amounts of data.

Useful Information

Information that is relevant and beneficial for understanding or solving a problem.

Quantitative Variable

A variable with quantitative data.