According the traditional Keynesian approach, an increase in government spending is effective in lowering unemployment if
A) the price level is fixed.
B) the price level is flexible.
C) the price level does not exist.
D) Ricardian equivalence occurs, regardless of the price level.

Question

Quizplus · Accepted Answer

In the traditional Keynesian approach, an increase in government spending is effective in lowering unemployment when the price level is fixed, as it allows for an increase in aggregate demand without causing inflation.

According the Traditional Keynesian Approach, an Increase in Government Spending