The initial short-run equilibrium level of real GDP is $ Suppose the government, seeking full employment, borrows money and increases its expenditures by the amount it believes necessary to close the output gap. According to critics of Keynesian fiscal policy, the government policy may result in complete crowding out. Which of the following aggregate demand curves shown in the previous graph would be consistent with complete crowding out? O ADI O AD₂ O AD3 trillion, and the initial short-run equilibrium price level is As a result, the equilibrium level of real GDP will be $ trillion, and the equilibrium price level will be According to critics of Keynesian fiscal policy, which of the following is true in this case? O Real GDP does not increase; only the price level increases. The increase in deficit-financed government spending causes real GDP to increase to full-employment output. The increase in deficit-financed government spending has no impact on real GDP and the price level. The increase in deficit-financed government spending causes real GDP to increase, but not to full-employment output.
The initial short-run equilibrium level of real GDP is $ Suppose the government, seeking full employment, borrows money and increases its expenditures by the amount it believes necessary to close the output gap. According to critics of Keynesian fiscal policy, the government policy may result in complete crowding out. Which of the following aggregate demand curves shown in the previous graph would be consistent with complete crowding out? O ADI O AD₂ O AD3 trillion, and the initial short-run equilibrium price level is As a result, the equilibrium level of real GDP will be $ trillion, and the equilibrium price level will be According to critics of Keynesian fiscal policy, which of the following is true in this case? O Real GDP does not increase; only the price level increases. The increase in deficit-financed government spending causes real GDP to increase to full-employment output. The increase in deficit-financed government spending has no impact on real GDP and the price level. The increase in deficit-financed government spending causes real GDP to increase, but not to full-employment output.
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter23: Aggregate Demand And Aggregate Supply
Section: Chapter Questions
Problem 8PA
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Ch 17. Crowding out
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