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In the Keynesian Model in the Short Run,a Decrease in Government

question 28

Multiple Choice

In the Keynesian model in the short run,a decrease in government purchases causes output to ________ and the real interest rate to ________.


Definitions:

Specialization

The focus of a business, region, or individual on producing a limited range of goods or services to gain greater efficiency and productivity.

Eighteenth-Century

A period in history ranging from the year 1701 to 1800, characterized by significant developments in politics, philosophy, science, and arts.

Pin Factory

A classic example used by Adam Smith to describe the benefits of specialization and division of labor.

The Wealth of Nations

A seminal book by Adam Smith that lays the foundations of classical economics and discusses the division of labor, productivity, and free markets.

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