With a permanent change in government purchases the model predicts consumption is:

Name: With a permanent change in government purchases the model predicts consumption is:
Brand: Quizplus
Rating: 4.9 (53 reviews)

Question

Quizplus · Accepted Answer

A permanent change in government purchases will lead to a parallel shift in the aggregate demand curve. This will lead to a change in the equilibrium level of output and income, but it will not affect the cyclical behavior of consumption. Therefore, consumption will be acyclical.

With a Permanent Change in Government Purchases the Model Predicts