Question 1
Which of the following would not raise equilibrium GDP in the Keynesian 45° line diagram?
◦ An increase in imports
◦ A decrease in the interest rate
◦ A decrease in taxation
◦ An increase in government spending
Question 2
Which of the following would not lower equilibrium GDP in the Keynesian 45° line diagram?
◦ An increase in household saving
◦ A decrease in government expenditure
◦ An increase in exports
◦ A decrease in investment