CFA Practice Question

CFA Practice Question

An economy has underutilized resources (unemployed labor and factories running). Suppose the Keynesian view of the world is true. The government adopts an expansionary policy that will produce inflation greater than the currently anticipated inflation. This will result in:
A. Higher nominal GDP and lower employment.
B. Lower real GDP and higher employment.
C. Higher real GDP and higher employment
Explanation: As per Keynes, the government spending should increase total demand in the economy.

User Contributed Comments 4

User Comment
ninad123 This is a mixture of Phillip Curve and Keynesian Theory.
bsm9 This is a very strange mixing of comments and I think beyond the CFA exam, certainly beyond any intro economics texts I looked at to get further understanding.
mary11 This is why the pass rate of the CFA is approx. 38% =)
AlexW1795 Try 25% =) (2021)
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