... of both arguments. It could be said that there is no right or wrong answer and it is up to ones self to decide which argument is more plausible and realistic from their point of view. The Keynesian stance is that an increase in Government Spending and a fall in Taxation will have a very substantial effect on the economy. If there is an increase in Government Spending, Keynesian's believe that it will generate an increase in aggregate demand for goods and services which will lead to an increase in aggregate expenditure. There will be an increase in the equilibrium level of Gross Domestic Product by the size of the spending multiplied by the simple multiplier. ( Multiplier-An increase in national income divided by the increase in the expenditure generating that increase income. In simple models, the size of the multiplier depends on the marginal propensity to consume ). It ...

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