In the Keynesian Model, a Decrease in Real Autonomous Spending

question 199

Multiple Choice

In the Keynesian model, a decrease in real autonomous spending results in a more than proportional decrease in real Gross Domestic Product (GDP) because

• A) consumption decreases as a result of lower real disposable income.
• B) consumption increases while real disposable income decreases.
• C) real autonomous spending decreases further as real disposable income decreases.
• D) government spending also decreases.

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Definitions:

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