Using the Keynesian approach, if total spending in the economy were greater than the level of output, injections into the spending stream would be:
A) less than leakages, and the level of output would increase.
B) less than leakages, and the level of output would decrease.
C) greater than leakages, and the level of output would increase.
D) greater than leakages, and the level of output would decrease.

Question

Quizplus · Accepted Answer

In the Keynesian approach, if total spending exceeds the level of output, it indicates that injections (investment, government spending, exports) are greater than leakages (savings, taxes, imports) from the spending stream. This excess demand leads to an increase in the level of output as firms ramp up production to meet the higher demand.

Using the Keynesian Approach, If Total Spending in the Economy