Within the Keynesian aggregate expenditures model, if the economy is below equilibrium, then there will be:
A. an increase the demand for goods and services.
B. an increase in real GDP.
C. lower interest rates, which will stimulate aggregate demand and keep the economy at full employment.
D. a lower price level, which will quickly guide the economy to full-employment equilibrium.
Answer: B
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In order to move aggregate demand to the level consistent with full employment by means of fiscal policy, government officials who set the budget must know
A) the current level of aggregate demand. B) the level of aggregate demand that would be consistent with full employment. C) the size of the budget changes required to induce the appropriate-sized changes in aggregate demand. D) all of the above.
A competitive firm would benefit from charging a price below the market price because the firm would achieve (i) higher average revenue. (ii) higher profits. (iii) lower total costs
a. (i) only b. (ii) and (iii) only c. (i), (ii), and (iii) d. None of the above is correct.