In the Basic Keynesian Model, a Decrease in Transfer Payments

question 75

Multiple Choice

In the basic Keynesian model, a decrease in transfer payments:

• A)reduces short-run equilibrium output.
• B)increases short-run equilibrium output.
• C)reduces potential output.
• D)increases potential output.

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Definitions:

Treasury Stock

Shares that were once part of the circulating supply but were bought back by the company, thus reducing the amount of outstanding stock.

Selling Price

The amount for which a product or service is sold to customers.

Paid-in Capital

Funds received by a company from equity investors in exchange for stock, representing the capital staked by shareholders in the company.

Treasury Stock

Shares that were issued and subsequently reacquired by the issuing company, removing them from the market.