In the Keynesian Model,an Increase in Government Purchases Affects Output

Multiple Choice

In the Keynesian model,an increase in government purchases affects output by

A) increasing labor supply, because workers feel effectively poorer.
B) increasing saving to pay for future taxes, lowering the real interest rate and shifting the IS curve to the left.
C) increasing the real interest rate due to crowding out, reducing aggregate demand.
D) increasing aggregate demand as national saving declines.