(Figure: Aggregate Expenditure Model 0) The figure shows a recession in the aggregate expenditure model. The full employment level of output is assumed to be $4,000. At lower levels of output, the economy is in a recession. Equilibrium in the aggregate expenditure model may occur below full employment. In Keynes's view, because the economy is at equilibrium at _____, it will remain _____ absent corrective policy measures.

A) $3000; below full employment
B) $4000; at full employment
C) $3000; at full employment
D) $4000; below full employment

Question

(Figure: Aggregate Expenditure Model 0) The figure shows a recession in the aggregate expenditure model. The full employment level of output is assumed to be $4,000. At lower levels of output, the economy is in a recession. Equilibrium in the aggregate expenditure model may occur below full employment. In Keynes's view, because the economy is at equilibrium at _____, it will remain _____ absent corrective policy measures.
 
A) $3000; below full employment 
B) $4000; at full employment 
C) $3000; at full employment 
D) $4000; below full employment

Quizplus · Accepted Answer

The Answer of (Figure: Aggregate Expenditure Model 0) The figure shows a recession in the aggregate expenditure model. The full employment level of output is assumed to be $4,000. At lower levels of output, the economy is in a recession. Equilibrium in the aggregate expenditure model may occur below full employment. In Keynes's view, because the economy is at equilibrium at _____, it will remain _____ absent corrective policy measures.
 
A) $3000; below full employment 
B) $4000; at full employment 
C) $3000; at full employment 
D) $4000; below full employment

(Figure: Aggregate Expenditure Model 0) the Figure Shows a Recession