In the Keynesian model, whenever planned saving is more than planned investment
A. there will be unplanned inventory depletion.
B. there will be unplanned inventory accumulation.
C. the interest rate will remain unchanged.
D. real GDP will not be influenced.
Answer: B
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According to the analysis of the short run and long run Phillips curves in the text, a persistent inflation rate of 10% per year: a. Would keep unemployment below the natural rate
b. Would keep unemployment above the natural rate. c. Would result in unemployment at the natural rate of unemployment. d. Is consistent with any of the above scenarios.
Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C