If a change in government spending causes "crowding in" in an open economy, which of the following might increase in addition to consumption and investments?

Question

Quizplus · Accepted Answer

"Crowding in" in an open economy occurs when an increase in government spending increases private sector investments and consumption, which leads to an increase in the demand for goods and services. As a result, net exports are likely to increase as well, as foreign buyers are attracted to the new supply of goods and services. Unemployment would not increase as an outcome of "crowding in" as the increase in demand for goods and services would create more job opportunities. The stock of capital and supply and demand would also not increase as they are not directly affected by the increase in government spending.

If a Change in Government Spending Causes "Crowding In" in an Open