The Keynesian region of the aggregate supply curve represents an economy with: S

Question

The Keynesian region of the aggregate supply curve represents an economy with:

Select one:
a. low unemployment and low inflation.
b. excess capacity but no unemployment or inflation.
c. high unemployment and high inflation.
d. high unemployment and low inflation.
e. low unemployment and high inflation.

Which of the following is true at the equilibrium level of income?

Select one:
Aggregate expenditures equal real GDP.
Unplanned inventory changes are positive.
Autonomous consumption spending is equal to induced consumption spending.
Unplanned investment spending is positive.
Firms are unable to produce the desired rate of output.

Explanation / Answer

Answer.)

Q1.) d.) High unemployment and low inflation

The fairly flat region Keynesian aggregate supply curve reflect that inflation is not a problem when unemployment is high. This is also the reason behind wide rejection of classical theory during the great depression.

Q2.) a.) Aggregate expenditures equal real GDP

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