If there is complete crowding out,the change in Real GDP that results from a given change in autonomous spending will be
A) zero.
B) greater than if there was incomplete crowding out.
C) infinite.
D) There is not enough information to answer the question.

Question

Quizplus · Accepted Answer

Complete crowding out occurs when an increase in government spending (autonomous spending) leads to an equal decrease in private spending, resulting in no net effect on overall spending and thus no impact on Real GDP. Therefore, the change in Real GDP resulting from a given change in autonomous spending will be zero.

If There Is Complete Crowding Out,the Change in Real GDP