Question

what happens to equlibrium level of income when government increase spending?

Answer 1

Using the Keynesian Cross, an increase in government expenditure will result to an increase in national income through increases in wages, consumption, savings, investment, imports and exports. ... This will lead to an increase in the equilibrium level of national income from Y1*.

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Answer 2

Using the Keynesian Cross, an increase in government expenditure will result to an increase in national income through increases in wages, consumption, savings, investment, imports and exports. ... This will lead to an increase in the equilibrium level of national income from Y1*.

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