Multiple Choice
Within the Keynesian model, if the output of an economy is less than the full-employment level, then
A) a reduction in government expenditures will direct the economy back to full-employment equilibrium.
B) a reduction in wage rates and resource prices will quickly restore full-employment equilibrium.
C) a reduction in the real interest rate will soon restore full-employment equilibrium.
D) output will tend to remain below full-employment capacity unless aggregate expenditures increase.
Correct Answer:
Verified
Correct Answer:
Verified
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