Files In the simple Keynesian model, if the tax multiplier were\"- 9\" the value

Question

Files In the simple Keynesian model, if the tax multiplier were"- 9" the value of the government spending multiplier would be 4 O 10 05 O -2 Question 10 2.5 pts Which of the following is the best example of Crowding out? O If US government spending on libraries increases, reading will become more popular, and people then will spend more on books. O If US Gt,interest rates fall, thereby causing business investment, I, to increase. 0 If US G and this is financed through borrowing from foreign lenders, this tends to cause an appreciation of the $. In turn this causes exports to decrease in the short run. None of the other options. The US government spends more (Gt), therefore they must increase taxes.

Explanation / Answer

In the simple keynesian model if the tax multiplier were -9 , the value of the government spending multiplier would be 8

Which of the following the best example of crowding out?

Ans:- If US G Increases and this is financed through borrowing from foreign lenders, this tends to cause an appreciation of the $ . In turn this causes exports to decrease in the short run.

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