Based on the Keynesian Theory of the Business Cycle, If

question 49

Multiple Choice

Based on the Keynesian theory of the business cycle, if the economy is at its full-employment equilibrium and aggregate demand increases then

• A) the price level and real GDP both increase.
• B) the price level rises but real GDP remains unchanged.
• C) the price level and GDP both decrease.
• D) real GDP decreases and the price level remains unchanged.

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Definitions:

Margin

The difference between the selling price of a product or service and the cost associated with producing it, usually expressed as a percentage of sales.

Marginal Subcontracting Cost

The additional cost incurred for each unit of production outsourced to a third party, rather than produced in-house.

Layoff Cost

The financial impact associated with reducing a company's workforce, including severance pay, unemployment benefits, and potential legal costs.

Hiring And Training Cost

Expenses associated with recruiting new employees and providing them with the necessary training to perform their job.