Question

According to the Keynesian model of income determination, an economy's total income in the short run depends on ___________.
A. Aggregate demand
B. Aggregate supply
C. Demand
D. All of the above

Answer 1

Hint: Let's discuss the Keynesian model of income determination, according to economic expert Keynes, there may be completely different sources of value, like government, foreign trade, people, businesses, and trusts. For decisive value, economic experts had divided the various sources of financial gain into four sectors namely’ unit sector, business, government sector, and the foreign sector.

Complete Answer:
The determination of the level of value within the two-sector economy is predicated on the assumption that the two-sector economy is an associated economy wherever there's no intervention of the govt. and foreign trade. Contains solely 2 sectors, namely, households and businesses. The households area unit the house owners’ issues of production and supply factor services to businesses to earn their keep within the kind of wages, rents, interest, and profits. Additionally the household’s area unit the customers of ultimate merchandise and services made by businesses. On the other hand, businesses purchase issue services from households to provide merchandise and services and sell them to households. Doesn't have government interference. If the government is there, it doesn't have any role to play within the economic activity of a rustic. For instance, within the two-sector economy, the govt. isn’t concerned with activities, like taxation, expenditure, and consumption.
Contains a closed economy within which foreign trade doesn't exist. In different words, import associated export services are absent in such an economy.
Contains no profit that's unvaried or savings by the organization. In different words, the profit earned by a company is totally distributed within the kind of dividends among shareholders.
So, the correct answer is Option D.

Note: The Simple Keynesian Model, which is additionally called the economic expert Cross, emphasizes one basic purpose. That time is that a decrease in mixture demand will result in a stable equilibrium with a substantial state. Together, these components confirm the equilibrium level of output.