In the Basic Keynesian Model, an Increase in Government Purchases

question 79

Multiple Choice

In the basic Keynesian model, an increase in government purchases:

• 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:

Project Analysis

The evaluation of the viability, stability, and profitability of a project through methods like cost-benefit analysis and risk assessment.

Rate of Return

The gain or loss on an investment over a specific period, expressed as a percentage of the investment's cost.

Required Return

The minimum rate of return on an investment that is necessary for it to be considered a viable option, taking into account its risk level.

IRR

In capital budgeting, the Internal Rate of Return serves as a tool for estimating the potential returns on investment projects.