In the Keynesian model in the short run,the amount of employment is determined by the effective labour demand curve and the level of
A)prices.
B)output.
C)the real interest rate.
D)the supply of labour.

Question

Quizplus · Accepted Answer

In the Keynesian model in the short run, employment is determined by the level of output. This is because firms hire workers to produce the level of output they expect to sell, and the level of output determines the amount of labour demand. Therefore, the effective labour demand curve (which shows the level of employment at different wage rates) intersects with the aggregate supply curve (which shows the level of output at different price levels) to determine the equilibrium level of employment and output in the short run. Price levels, the real interest rate, and the supply of labour may influence the shape of these curves, but they do not determine the level of employment directly.

In the Keynesian Model in the Short Run,the Amount of Employment