In the traditional Keynesian model, an increase in government spending leads to all of the following EXCEPT
A)an increase in aggregate demand.
B)a higher price level.
C)an increase in consumption.
D)higher real GDP.

Question

Quizplus · Accepted Answer

In the traditional Keynesian model, an increase in government spending leads to an increase in aggregate demand, which in turn leads to an increase in consumption, higher real GDP, and lower unemployment. However, it does not necessarily lead to a higher price level, as the price level depends on multiple factors, such as the availability of resources and the level of competition in the market.

In the Traditional Keynesian Model, an Increase in Government Spending