In the Traditional Keynesian Model, an Increase in Government Spending

question 53

Multiple Choice

In the traditional Keynesian model, an increase in government spending

• A) causes the C + I + G + X line to shift upward by the full amount of the increase in government spending.
• B) causes the C + I + G + X line to shift upward by an amount less than the increase in government spending.
• C) causes the C + I + G + X line to shift upward by more than the increase in government spending.
• D) causes no change in the C + I + G + X line.

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Definitions:

Total Revenue

The total amount of money received by a firm from selling goods or services before any costs or expenses are deducted.

Rent-Seeking Activity

Economic practices aimed at increasing one's share of existing wealth without creating new value, often through manipulation or exploitation of the political environment.

Demand Schedule

A table that shows the quantity of a good or service that consumers are willing to buy at each price point.

Marginal Cost

The incremental expense incurred from the production of an extra unit of a good or service.