Assertion (A): Equilibrium income can be below the full-employment level.
Reason (R): Equilibrium depends on aggregate demand, which may be too low to employ everyone willing to work.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

Keynes's key point: AD = AS can occur with involuntary unemployment. R explains A.

Concept: Underemployment equilibrium
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsFull employment and involuntary unemployment

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Assertion (A): Equilibrium income can be below the full-employment level.Reason (R): Equilibrium depends on aggregate demand, which may be too low to employ everyone willing to work.

Explanation

Assertion (A): Equilibrium income can be below the full-employment level.
Reason (R): Equilibrium depends on aggregate demand, which may be too low to employ everyone willing to work.