Economics · Fiscal Policy and Macroeconomics
In a Keynesian macroeconomic framework, an increase in the government budget deficit is most likely to:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Boost aggregate demand and short-run economic output✓
- 2Cause a persistent fall in the general price level
- 3Lead to a substantial rise in involuntary cyclical unemployment
- 4Directly reduce aggregate spending on imports
Correct answer
Boost aggregate demand and short-run economic output
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