Equilibrium in the Keynesian model is
a. quite stable, unless the government does something to throw it off balance.
b. stable as long as planned injections are equal to planned leakages.
c. not affected much by taxes or government spending.
d. not a significant concept in Keynesian analysis.
b. stable as long as planned injections are equal to planned leakages.
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During an economic slump, policies that lower interest rates may not actually boost investment because
A) lower interest rates tend to discourage investment, all other things unchanged. B) investment is never affected by interest rate changes. C) of pessimistic expectations by businesses about the future of the economy. D) taxes may have been decreased during a recessionary period.
When production of a good provides external benefits, there will be
a. too few resources devoted to its production. b. too many resources devoted to its production. c. the optimal amount of resources devoted to its production. d. abnormally high profits earned by producers of the good.