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.
D
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Refer to Table 4-3. The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear. If the market price of cowboy hats is $50, producer surplus is
A) $0. B) $4. C) $62. D) $138.
Why is money you receive at some future date worth less to you than money you receive today?
What will be an ideal response?
According to Keynes, involuntary unemployment is possible because of
A) the existence of capital markets. B) long-term labor contracts and the existence of labor unions. C) government interference in the market economy. D) inflation.
Concerning the effect of New Deal farm measures, Walton and Rockoff conclude that the New Deal _____
a. simply failed to help farmers because the farmer's terms of trade did not improve. b. helped the farmer to a limited extent primarily through the stimulation of aggregate demand. c. helped the farmer to a substantial extent by limiting farm output. d. helped the farmer to a substantial extent by increasing farm output.