Macroeconomics 6th Edition by Robert Hall,Marc Lieberman

تمرين 3

Consider the following statement: "In the classical model, just as an increase in government purchases causes complete crowding out, so a decrease in government purchases causes complete crowding in."
a. In this statement, explain what is meant by "crowding in" and "complete crowding in."
b. Is the statement true? (Hint: Look at the diagram you drew in problem 2.)
Reference diagram in problem 2: