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

Question

Quizplus · Accepted Answer

In the traditional Keynesian model, an increase in taxes leads to a decrease in aggregate demand, a decrease in consumption, and a lower real GDP. However, it does not lead to an increase in price level.

In the Traditional Keynesian Model, an Increase in Taxes Leads