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Question
According to the traditional Keynesian analysis, if the government increases spending by $10 million, then
A) consumption will increase, and so total expenditures will increase by more than $10 million.
B) consumption will decrease, and so total expenditures will increase by less than the $10 million.
C) consumption will remain the same, and so total expenditures will increase by exactly $10 million.
D) consumption will increase or decrease, and so total expenditures will increase or decrease depending on the change in consumption.
Answer
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