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In the Traditional Keynesian Model, a Decrease in Government Spending

Question 272

Multiple Choice

In the traditional Keynesian model, a decrease in government spending lowers total planned real expenditures by more than the original decrease in government spending because


A) consumption spending depends negatively on real GDP.
B) consumption spending depends positively on real GDP.
C) consumption spending is not related to real GDP.
D) of the crowding-out effect on consumption spending.

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