Spending on the war in Afghanistan is essentially categorized as government purchases.How do increases in spending on the war in Afghanistan affect the aggregate demand curve?
A)They will move the economy up along a stationary aggregate demand curve.
B)They will move the economy down along a stationary aggregate demand curve.
C)They will shift the aggregate demand curve to the left.
D)They will shift the aggregate demand curve to the right.

Question

Quizplus · Accepted Answer

Increases in spending on the war in Afghanistan will increase government purchases, which will shift the aggregate demand curve to the right. This is because government purchases are a component of aggregate demand, so an increase in government purchases will increase overall spending in the economy, leading to a higher level of output and price level.

Spending on the War in Afghanistan Is Essentially Categorized as Government