Question

Use the Keynesian model to explain the cyclical behavior of employment and investment.

A. Employment increases during economic downturns, and investment decreases during expansions.
B. Employment decreases during economic downturns, and investment increases during expansions.
C. Employment and investment both increase during economic downturns.
D. Employment and investment both decrease during economic expansions.

Answer 1

The Keynesian model explains that employment decreases during economic downturns and investment increases during expansions. On the other hand, investment increases during expansions, which refers to a period of high economic activity. During expansions, businesses are more confident in the future.

Step-by-step explanation:

The Keynesian model helps to explain the cyclical behavior of employment and investment. In this model, employment decreases during economic downturns, which refers to a period of low economic activity or recession. This is because during a downturn, businesses often reduce their workforce to cut costs. On the other hand, investment increases during expansions, which refers to a period of high economic activity.

The Keynesian model explains that employment decreases during economic downturns and investment increases during expansions. On the other hand, investment increases during expansions, which refers to a period of high economic activity. During expansions, businesses are more confident in the future and are more willing to invest in new projects and expand their operations.