According to the Keynesian view, an unanticipated reduction in spending will
a. increase the demand for goods and services.
b. raise business inventories and lead to a decline in output.
c. lead to lower interest rates, which will stimulate aggregate demand and keep the economy at full employment.
d. lead to a lower price level, which will quickly guide the economy to full-employment equilibrium.
B
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The nominal interest rate plus the inflation rate equals the real interest rate
Indicate whether the statement is true or false
Firms operating in competitive markets produce output levels where marginal revenue equals
a. price. b. average revenue. c. total revenue divided by output. d. All of the above are correct.
Lobbying can shape regulations through:
A. collusion. B. objective cost benefit analysis. C. forced action. D. rent-seeking behavior.
Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the short run would be:
A. P1 and Y2. B. P2 and Y3. C. P3 and Y1. D. P2 and Y2.