Achieving Full Employment in the Simple Keynesian Model

Achieving Full Employment

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In the simple Keynesian model, if equilibrium output is less than the level required for full employment, what must happen for full employment to be achieved?

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E

When equilibrium output is less than the economy's capacity, only an increase in expenditures will lead to full employment. This is because under the Keynesian model, aggregate expenditures are considered the catalyst the change in output; that is, aggregate output is accommodative of aggregate expenditures.

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