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According to John Maynard Keynes, Why Does the Economy Sometimes

Question 54

Multiple Choice

According to John Maynard Keynes, why does the economy sometimes reach equilibrium at a level of income below the full employment level?


A) Because the demand for investment is inelastic with respect to interest rates
B) Because prices and wages are inflexible downward
C) Because aggregate demand does not shift in response to changes in government spending
D) Because aggregate demand does not shift in response to changes in investment spending

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