Keynes argued that the sum of the components that comprise aggregate demand _________________.a.could add up to an output smaller than the economy is capable of producing, thus resulting in less than full employmentb.could add up to an output greater than the economy is capable of producing, thus resulting in less than full employmentc.always equaled the output the economy is capable of producingd.equaled the output the economy is capable of producing by definition

Keynes' motivation in developing the aggregate output determination model originated from his concern with explaining _______________.a.the hyperinflations of the 1920s.b.why the Great Depression occurred.c.the high unemployment in Great Britain before World War I.d.the high unemployment in Great Britain after World War II.Clear my choice

In the simple Keynesian model, which of the following statements is false? Group of answer choices An increase in the marginal propensity to save will reduce the level of income in the economy. The reduction in output from an increase in taxation is larger the smaller is the marginal propensity to consume. An increase in lump sum taxation accompanied by an increase in government spending of the same size will increase output. The equilibrium level of output does not depend upon the size of the money multiplier.

In the Keynesian income-expenditure model, equilibrium income is necessarily equal to a multiple ofGroup of answer choicesthe exogenous component of planned aggregate expenditure which is partly dependent on the autonomous component of taxation when government is includedthe autonomous component of consumption, regardless of whether the economy is closed or openthe sum of investment, government expenditure and net exportsnone of the other alternatives are correct.

An increase in aggregate supply can lead to lower output and higher unemployment in the long run.Question 47Answera.Trueb.False

The theory of Keynesian economics emphasizes the role of:Question 9Answera.Aggregate demand (AD) in driving economic activityb.Aggregate supply (AS) in determining price levelsc.Free markets and laissez-faire policiesd.Government regulation of international trade