In the Basic Keynesian Model, a Decrease in Government Purchases

question 119

Multiple Choice

In the basic Keynesian model, a decrease 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:

Alternatives

Options or choices available in a given situation.

Joint Costs

Costs incurred in the process of producing two or more products simultaneously up to the point of separation.

Split-off Point

The stage in the manufacturing process where joint products are recognizable as separate products and can be individually processed further or sold.

Split-off Point

The stage in a production process where multiple products become individually identifiable and their costs can be separately assigned.