The case when an increase in government spending isn't large enough to significantly increase aggregate demand is called:
A) crowding out.
B) a drop in the bucket.
C) a matter of timing.
D) a real shock.

Question

Quizplus · Accepted Answer

The term "a drop in the bucket" means that the increase in government spending is too small to have a meaningful impact on aggregate demand. The other options, such as crowding out and a matter of timing, refer to situations where there may be other factors at play that affect the effectiveness of government spending in stimulating the economy.

The Case When an Increase in Government Spending Isn't Large