A decrease in government expenditure on goods and services
A) increases aggregate demand.
B) decreases aggregate demand.
C) increases the aggregate quantity demanded.
D) decreases the aggregate quantity demanded.

Question

Quizplus · Accepted Answer

A decrease in government expenditure on goods and services means that there is less government spending in the economy. This results in a decrease in aggregate demand, as there is less total spending in the economy, which leads to a decrease in the production of goods and services. Ultimately, this decreases the aggregate quantity demanded.

A Decrease in Government Expenditure on Goods and Services