One Way to View Equilibrium in the Simple Keynesian Model

question 59

Multiple Choice

One way to view equilibrium in the simple Keynesian model without government spending and taxes is that:

• A)saving equals planned investment.
• B)saving equals planned expenditures.
• C)saving equals planned autonomous spending.
• D)None of the above.

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Definitions:

Discretion

The freedom or authority to make decisions and judgements, often within a set of rules or guidelines, typically concerning policies or the application of resources.

Fed

Refers to the Federal Reserve, the central banking system of the United States, responsible for monetary policy.

Monetary Policy

Actions by a central bank to influence the economy by adjusting interest rates and the amount of money in circulation.

Time Inconsistency Problem

A situation where a decision-maker's preferences change over time, leading to a conflict between past and present desires.