According to Keynes,changes in "animal spirits" will affect actual output through changes in:
A) business investment spending.
B) government expenditure and taxes.
C) money supply and interest rates.
D) labour productivity and technological progress.

Question

Quizplus · Accepted Answer

Keynes believed that changes in "animal spirits" (i.e. the sentiment and confidence of businesspeople and consumers towards the economy) would affect actual output through changes in business investment spending. When animal spirits are high, businesses are more likely to invest in new projects and expand operations, leading to increased output. Conversely, when animal spirits are low, businesses are more likely to withhold investment and decrease output.

According to Keynes,changes in "Animal Spirits" Will Affect Actual Output