In the Traditional Keynesian Model, an Increase in Government Spending

question 187

Multiple Choice

In the traditional Keynesian model, an increase in government spending raises total planned real expenditures by more than the original increase in government spending because

• A)consumption spending depends negatively on real GDP.
• B)consumption spending depends positively on real GDP.
• C)consumption spending is not related to real GDP.
• D)of the crowding-out effect on consumption spending.