Keynesian Analysis Suggests That a Planned Budget Surplus

question 55

Multiple Choice

Keynesian analysis suggests that a planned budget surplus

• A) will affect aggregate demand only if the money supply decreases by the size of the surplus.
• B) will stimulate both consumption and income.
• C) will stimulate output and employment.
• D) is proper during periods of inflation but may increase unemployment if timed improperly.

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Definitions:

Common Stock

Represents equity ownership in a corporation, giving shareholders voting rights and a claim on a portion of the company's profits through dividends.

Treasury Shares

Shares that were issued and then repurchased by the issuer, reducing the quantity of outstanding stock.

Outstanding Shares

The total number of shares of a company's stock currently held by all its shareholders, including share blocks and restricted shares.

Issued Shares

The total number of shares that have been sold to and are held by shareholders.