In the Keynesian AE Model,what Impact Does an Increase in Real

question 7

Multiple Choice

In the Keynesian AE model,what impact does an increase in real wealth have on AE?

• A)It shifts AE down, increases inventories, and reduces output.
• B)It shifts AE up, increases inventories, and causes an increase in output.
• C)It shifts AE up, reduces inventories, and causes an increase in output.
• D)It shifts AE down, reduces inventories, and reduces output.

Recognize the role of productivity in determining a country's standard of living.

Understand the influence of human and physical capital on productivity.

Grasp the effects of population growth and education on economic outcomes.

Understand the importance of property rights and government policies in economic development.

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Definitions:

Stated

Explicitly expressed or declared.

Policy

A deliberate system of principles to guide decisions and achieve rational outcomes within an organization or institution.

Broad Guidelines

General principles or rules designed to direct actions or decisions in a wide range of situations, providing a flexible framework rather than strict instructions.

Decisions

The process of making choices between alternatives or the result of such a process.