In the basic Keynesian model,an increase in government purchases

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In the basic Keynesian model, an increase in government purchases will increase aggregate demand and shift the AD curve to the right. As a result, short-run equilibrium output will increase. This occurs because firms will increase their production to meet the higher level of demand, which results in an increase in output. However, potential output is unaffected by the change in government purchases as it is determined by the economy's productive capacity.

In the Basic Keynesian Model,an Increase in Government Purchases