In the Keynesian Model,an Increase in Government Purchases Affects Output

question 73

Multiple Choice

In the Keynesian model,an increase in government purchases affects output by

• A)increasing labour supply,because workers feel effectively poorer.
• B)increasing saving to pay for future taxes,lowering the real interest rate and shifting the IS curve to the left.
• C)increasing the real interest rate due to crowding out,reducing aggregate demand.
• D)increasing aggregate demand as national saving declines.

---

Definitions:

Produces

Refers to the creation or manufacturing of goods and services for sale.

Social Responsibility

The obligation of a business to have a positive effect on society on four levels—economic, legal, ethical, and philanthropic.

Business's Obligation

The responsibilities and commitments a business has, including legal, financial, and ethical duties to its stakeholders.

Community

A group of people living in the same place or having a particular characteristic in common, often sharing a sense of belonging or community spirit.