In the traditional Keynesian model, if the government increases spending, then
A) consumption will increase, and so real Gross Domestic Product (GDP) will increase by more than the increase in government spending.
B) consumption will decrease, and so real Gross Domestic Product (GDP) will increase by less than the increase in government spending.
C) consumption will remain the same, and so real Gross Domestic Product (GDP) will increase by the same amount of the increase in government spending.
D) consumption will increase or decrease, and so real Gross Domestic Product (GDP) will increase or decrease depending on the change in consumption.
A
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The above table has the private demand for loanable funds and the private supply of loanable funds schedules
If the government budget surplus is $200 billion, and there is no Ricardo-Barro effect, the equilibrium real interest rate is ________ and the equilibrium quantity of loanable funds is ________. A) 8 percent; $700 billion B) 4 percent; $700 billion C) 4 percent; $500 billion D) 8 percent, $500 billion E) 6 percent; $600 billion
Keynes's model of the demand for money suggests that velocity is
A) constant. B) positively related to interest rates. C) negatively related to interest rates. D) positively related to bond values.