If the traditional Keynesian views turn out to be accurate, an increase in government spending would:
A)increase the price level.
B)decrease the investment.
C)increase the equilibrium level of real GDP.
D)decrease the consumption.
E)decrease the money supply.

Question

Quizplus · Accepted Answer

According to Keynesian economics, an increase in government spending can increase the equilibrium level of real GDP. This is because government spending injects new demand into the economy, which can lead to increased production and employment. However, this view is not universally accepted and there is debate about the effectiveness of government spending in stimulating economic growth.

If the Traditional Keynesian Views Turn Out to Be Accurate