Keynes believed equilibrium income was:
A)not fixed at the economy's potential income.
B)fixed at the economy's potential income.
C)always below the economy's potential income.
D)always above the economy's potential income.

Question

Quizplus · Accepted Answer

Keynes argued that equilibrium income in an economy is not necessarily fixed at the economy's potential income. Instead, it can vary based on aggregate demand and can be below potential, leading to unemployment, or above potential, leading to inflationary pressures.

Keynes Believed Equilibrium Income Was