Answer to Question #214111 in Economics for Paballo

Question

Which one of the following is correct about government spending in the Keynesian model?

[1] Government spending affect the size of the multiplier.

[2] Government spending decreases aggregate spending in the economy.

[3] A decrease in repo rate discourage social spending by government.

[4] Government spending has an effect on the income level in the economy.

Answer 1

The correct answer is [4] Government spending has an effect on the income level in the economy.