According to the Keynesian view, if an economy was operating at long-run equilibrium, an increase in government expenditures (holding taxes constant) would
A) be inflationary.
B) lead to a recession.
C) lower the real rate of interest.
D) reduce the size of the national debt.

Question

Quizplus · Accepted Answer

An increase in government expenditures, holding taxes constant, would increase aggregate demand, potentially leading to demand-pull inflation if the economy is already at long-run equilibrium.

According to the Keynesian View, If an Economy Was Operating