In the Keynesian-Cross Model, If Government Purchases Increase by 100

question 42

Multiple Choice

In the Keynesian-cross model, if government purchases increase by 100, then planned expenditures for any given level of income.

• A)increase by 100.
• B)increase by more than
• C)100. decrease by 100.
• D)increase, but by less than 100.

---

Definitions:

Loanable Funds

The money available for borrowing; the market where savers supply funds for loans to borrowers.

Supply

A relation between the price of a good and the quantity that producers are willing and able to sell per period, other things constant.

Demand

Refers to the quantity of a good or service that consumers are willing and able to purchase at various price levels over a given period of time.

Interest Rate

The percentage charged on borrowed money or paid on savings accounts, essentially the cost of borrowing money or the reward for saving.