In the traditional Keynesian model, a decrease in government spending lowers total planned real expenditures by more than the original decrease in government spending because
A. of the crowding-out effect on consumption spending.
B. consumption spending depends positively on real GDP.
C. consumption spending depends negatively on real GDP.
D. consumption spending is not related to real GDP.
Answer: B
You might also like to view...
The observation that the money supply is procyclical and leading the level of aggregate economic theory is most closely associated with
A) Lucas and Friedman. B) Friedman and Schwartz. C) Kydland and Prescott. D) David Runkle.
In the last two decades, inflation has been relatively high in the U.S. economy, with the Consumer Price Index typically rising 10–12 percent per year
a. True b. False Indicate whether the statement is true or false
What are the typical effects on the labor market of technological progress?
The market for unskilled labor is illustrated in the figure above. The market is in equilibrium and then a minimum wage of $5 per hour is imposed. Unemployment will equal
A) 0 hours. B) 10 million hours per year. C) 20 million hours per year. D) 30 million hours per year.