According to Keynes, if the economy is in a deep recession, an increase in aggregate demand will
A. increase real GDP without putting significant upward pressure on the price level.
B. decrease real GDP.
C. increase the price level with no effect on real GDP.
D. increase both real GDP and the price level.
A. increase real GDP without putting significant upward pressure on the price level.
You might also like to view...
Which of the following would cause an outward shift of the production possibilities frontier?
a. An increase in opportunity costs b. A reduction in the size of the labor force c. A reduction in inefficiency d. A change in the combination of goods produced e. An improvement in technology
The relationship between consumer spending and disposable income is called the
a. conjunction function. b. consumption function. c. aggregate demand function. d. marginal spending function.
The income elasticity of demand
A) is positive only. B) is negative only. C) must lie between -1 and +1. D) can be positive, negative, or zero.
Which of the following is true of a change in dividend payments?
A. There is no substitution effect because a change in dividend payments does not change the trade-off between work and leisure. B. There is no substitution effect because a change in dividend payments does not change a household's permanent income. C. There is no income effect because a change in dividend payments does not change the trade-off between work and leisure. D. There is no income effect because a change in dividend payments does not change a household's permanent income.