Figure 11-2

Which graph in Figure 11-2 best reflects a Keynesian view of the impact of a $500-per-person tax cut?
A) 1
B) 2
C) 3
D) 4

Question

Figure 11-2

Which graph in Figure 11-2 best reflects a Keynesian view of the impact of a $500-per-person tax cut?
A) 1 
B) 2 
C) 3 
D) 4

Quizplus · Accepted Answer

The Keynesian view emphasizes the role of aggregate demand in driving economic growth. Graph 2 shows an increase in aggregate demand (AD) due to the tax cut, leading to an increase in real GDP and price level (P). This aligns with Keynesian policies that advocate for governmental intervention to boost demand during times of economic downturn.

Figure 11-2 Which Graph in Figure 11-2 Best Reflects a Keynesian View