No Bull Economics Lessons

Macroeconomics & Microeconomics Concepts You Must Know

AD/AS and Fiscal Policy (1 of 10)

Question 1:
In the Keynesian model, a decrease in which of the following will lead to an increase in unemployment?

A.  Interest rates
B.  Gross investment
C.  Imports
D.  Taxes
E.  All of the above

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Correct Answer: B, Gross investment. If there is a decrease in gross investment then aggregate demand would decrease. The results are lower prices, decreased real GDP, and increased unemployment.