Keynesian Analysis Suggests That If Planned Spending (Aggregate Demand)were $700

question 47

Multiple Choice

Keynesian analysis suggests that if planned spending (aggregate demand) were $700 billion but GDP was $800 billion,

• A)businesses would accumulate inventories,and output would fall.
• B)output would rise,incomes would rise,and tax revenues would automatically increase.
• C)production would be stimulated,and output would increase,unless the full-capacity output was less than $950 billion.
• D)the Federal Reserve would eventually lower interest rates.

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Definitions:

Business Valuation

A process and a set of procedures used to estimate the economic value of an owner’s interest in a business.

Profit Potential

The capacity or likelihood for a business venture to generate earnings over costs.

Balance Sheet Method

A financial accounting strategy for valuing assets or determining net worth by comparing what is owned to what is owed.

Holdback Money

Funds retained by one party in a transaction as security or leverage until certain conditions are met.