In a closed economy with unutilized capacity, if the investment rate remains unchanged and savings amount to 20 percent of GDP, an increase in the government's fiscal deficit by 100 units will cause economic activity to increase by
Tap an option to check your answer.
Checking your account…
Keynesian cross and the multiplier has come up 167 times in 7 exams since 2006.
This question is on Government spending and tax multipliers, part of Keynesian cross and the multiplier in Macroeconomics.
The effect on income of changes in government spending, lump-sum taxes, transfers and income taxes.
TestStop has 45 past-paper questions on this subtopic; the nearest in year are below.
Question from the JNU SSS 2021 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.