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:

Productivity

The measure of efficiency in converting inputs into outputs, often gauged by the quantity of goods and services produced per unit of input.

Labor Productivity

A measure of economic performance calculated by dividing the total output by the number of hours worked.

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A company's goal to achieve the highest possible profit, where marginal revenue equals marginal cost.

Altruistic Motives

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