In Keynesian economics, the key to understanding how total spending can be more or less than current production is the role played by:
A) net exports.
B) business inventories.
C) business investment spending.
D) government transfer payments.

Question

Quizplus · Accepted Answer

Business inventories play a crucial role in Keynesian economics for understanding how total spending can diverge from current production. When businesses accumulate inventories, it indicates that production exceeds spending, and when they deplete inventories, it suggests spending exceeds production. This dynamic is central to Keynesian views on economic cycles and the adjustment processes in the economy.

In Keynesian Economics, the Key to Understanding How Total Spending