Asked by Jessa Gesta on Apr 30, 2024
Verified
According to Keynes,aggregate supply and aggregate demand will be equal only if
A) savings equals investment.
B) savings exceeds investment.
C) investment is larger than savings in the economy.
D) is not related to the relationship between savings and investment.
Keynes
refers to John Maynard Keynes, a British economist whose theories on the causes of prolonged unemployment and recommendations for government intervention in economies to stimulate demand and control inflation have had a significant influence on modern macroeconomics.
Aggregate Supply
The total supply of goods and services that firms in a national economy plan to sell during a specific time period.
Aggregate Demand
The total demand for goods and services within an economy at a given time and price level.
- Recognize the importance of the interest rate, real wealth effect, and investment-savings relationship in determining economic equilibrium.
- Assess the role of government intervention in addressing economic instability according to Keynesian theory.
Verified Answer
SJ
suman jakhuMay 01, 2024
Final Answer :
A
Explanation :
According to Keynes, aggregate supply and aggregate demand will be equal only if savings equals investment. In other words, the production of goods and services will be equal to the amount of money available for investment, which will create a market-clearing equilibrium at full employment.
Learning Objectives
- Recognize the importance of the interest rate, real wealth effect, and investment-savings relationship in determining economic equilibrium.
- Assess the role of government intervention in addressing economic instability according to Keynesian theory.