In the Keynesian Model, Whenever Planned Investment Is Less Than

question 277

Multiple Choice

In the Keynesian model, whenever planned investment is less than planned saving

• A) the amount of planned investment will decrease, and real GDP will decrease.
• B) the amount of planned investment will decrease, and real GDP will remain unchanged.
• C) there will be an unplanned inventory decrease, and real GDP will eventually increase.
• D) there will be an unplanned inventory increase, and real GDP will eventually decrease.

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Definitions:

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Marginal Cost Curve

A graphical representation that shows how the cost of producing one more unit of a good varies as production volume changes.

Diminishing Returns

A principle stating that as additional units of a variable input are added to a fixed input, the marginal product of the variable input eventually decreases.

Upward-Sloping

Describes a line or curve on a graph that moves higher on the y-axis as it moves to the right on the x-axis, typically used to describe a supply curve in economics.