Answer to Question #216598 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

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