In the long run,most economists agree that a permanent increase in government spending leads to
A)no decrease in private spending.
B)a decrease in private spending by less than the amount that government spending increased.
C)a decrease in private spending by the same amount that government spending increased.
D)a decrease in private spending by more than the amount that government spending increased.

Question

Quizplus · Accepted Answer

In the long run, a permanent increase in government spending will lead to a decrease in private spending by the same amount that government spending increased. This is because the government is competing with the private sector for resources, and as the government spends more, it will crowd out private investment and consumption.

In the Long Run,most Economists Agree That a Permanent Increase