Asked by Daniel Bathaei on May 10, 2024
Verified
According to Keynes,at equilibrium,aggregate demand will always equal each of the following EXCEPT
A) C + I.
B) C + S.
C) full employment GDP.
D) aggregate supply.
Aggregate Demand
Aggregate demand represents the total sum of demand for all products and services in an economy, measured at a specific price level and during a particular time frame.
Full Employment GDP
The level of GDP at which all available labor resources are being used in the most efficient way possible, typically associated with a low unemployment rate.
C + I
Represents the sum of consumption (C) and investment (I) in an economy, indicating total expenditures on goods and services.
- Expound upon the Keynesian disapproval of traditional economic theories, centering on issues of savings, investment, and the importance of government intervention.
- Present an analysis of the aggregate supply and demand from both Keynesian and classical economical stances.
Verified Answer
BÇ
Baran ÇakmakMay 16, 2024
Final Answer :
C
Explanation :
Keynesian economics posits that at equilibrium, aggregate demand equals aggregate supply and is represented by C + I (consumption + investment) or C + S (consumption + savings). However, it does not necessarily equal full employment GDP, as Keynes highlighted situations where an economy can be in equilibrium (aggregate demand equals aggregate supply) without achieving full employment.
Learning Objectives
- Expound upon the Keynesian disapproval of traditional economic theories, centering on issues of savings, investment, and the importance of government intervention.
- Present an analysis of the aggregate supply and demand from both Keynesian and classical economical stances.