In the traditional Keynesian model, if the government increases government spending,
A) the C + I + G + X line will shift down but the aggregate demand curve will not shift.
B) the C + I + G + X line will shift down and the aggregate demand curve will shift to the left.
C) the C + I + G + X line will shift up and the aggregate demand curve will shift to the right.
D) the C + I + G + X line will shift up but the aggregate demand curve will not shift.

Question

Quizplus · Accepted Answer

In the traditional Keynesian model, increasing government spending will shift the C + I + G + X line up, as government spending is a component of aggregate demand. This, in turn, will shift the aggregate demand curve to the right, as higher government spending will increase overall demand in the economy.

In the Traditional Keynesian Model, If the Government Increases Government