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:

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A course of action adopted and pursued by a government or political party on national issues.

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The rights and responsibilities allocated to state governments, as distinguished from those vested in the federal government, under a federal system of governance.

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A provision in the U.S. Constitution (Article I, Section 8, Clause 18) granting Congress the power to pass all laws necessary and proper for carrying out the enumerated list of powers.

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