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Which component of effective demand is considered stable in the short run by Keynes?
  • a)
    Aggregate supply function.
  • b)
    Consumption function.
  • c)
    Investment function.
  • d)
    The rate of interest.
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
Which component of effective demand is considered stable in the short ...
Keynes regarded the consumption function as a stable phenomenon in the short run. This means that the relationship between consumption expenditure and income remains relatively constant over a short period of time. While investment and the overall level of effective demand can be volatile, consumption tends to be more predictable due to established spending patterns and habits of individuals.
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Which component of effective demand is considered stable in the short run by Keynes?a)Aggregate supply function.b)Consumption function.c)Investment function.d)The rate of interest.Correct answer is option 'B'. Can you explain this answer?
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