Keynes Argued That the Sum of the Components That Comprise

question 3

Multiple Choice

Keynes argued that the sum of the components that comprise aggregate demand

• A)could add up to an output smaller than the economy is capable of producing,thus resulting in less than full employment.
• B)could add up to an output greater than the economy is capable of producing,thus resulting in less than full employment.
• C)always equaled the output the economy is capable of producing.
• D)equaled the output the economy is capable of producing by definition.

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Definitions:

Callable Bonds

Bonds that can be redeemed by the issuer prior to their maturity date at a predetermined call price.

Required Rate Of Return

The minimum annual percentage earned by an investment that will induce individuals or companies to put money into a particular security or project.

Reinvestment Rate Risk

Reinvestment Rate Risk is the risk that the returns from reinvesting cash flows will be lower than initially anticipated due to changes in interest rates.

Annual Interest Payment

The total amount of interest paid on a bond or loan over the course of a year.