In the Keynesian model, an increase in government spending increases
A) the money supply by an equal amount.
B) the money supply by a multiple amount.
C) aggregate demand by an equal amount.
D) aggregate demand by a multiple amount.

Question

Quizplus · Accepted Answer

In the Keynesian model, an increase in government spending increases aggregate demand by a multiple amount due to the multiplier effect, where initial spending leads to increased income and consumption, further boosting aggregate demand.

In the Keynesian Model, an Increase in Government Spending Increases