In the Keynesian model, if total spending by households, businesses, government units and foreign buyers is greater than the total output produced in the economy, then:
A) total output will increase.
B) total spending will decrease.
C) total output will increase and total spending will decrease.
D) any of the above could happen.

Question

Quizplus · Accepted Answer

In the Keynesian model, if total spending exceeds total output, it leads to an increase in total output as producers ramp up production to meet the higher demand.

In the Keynesian Model, If Total Spending by Households, Businesses