Question

In the simple Keynesian model, an increase in government spending would cause aggregatedemand and output to change by ______ the equivalent increase i

Answer 1

Answer:

Change by the same increase rate of the government spending.

Explanation:According Keynesian model, an increase in government spending while other spending remain constant, the output and aggregate demands also increases by some multiples of the same increase in government spending I.e the multiplier effect applies.