The Keynesian Cross Shows

question 30

Multiple Choice

The Keynesian cross shows:

• A) determination of equilibrium income and the interest rate in the short run.
• B) determination of equilibrium income and the interest rate in the long run.
• C) equality of planned expenditure and income in the short run.
• D) equality of planned expenditure and income in the long run.

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Definitions:

Purely Competitive

A market structure characterized by many participants offering identical products, where no single buyer or seller can influence the market price.

Economic Profits

The excess of total revenue over total costs, including both explicit and implicit costs, as calculated in economic theory.

Normal Profits

The minimum level of profit necessary for a company to remain competitive in the market, essentially covering opportunity costs but not generating excess profit.

Purely Competitive

A market structure characterized by many buyers and sellers, free entry and exit, and a homogeneous product, leading to price-taking behavior.