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) labor productivity and technological progress.

Question

Quizplus · Accepted Answer

According to Keynes, "animal spirits" refer to the psychological factors, such as confidence and optimism, that influence economic decision-making by businesses and individuals. If there is a positive change in business confidence, for example, firms are likely to increase their investment spending, which would lead to an increase in actual output. Therefore, changes in "animal spirits" will affect actual output through changes in business investment spending.

According to Keynes, Changes in "Animal Spirits" Will Affect Actual