An increase in investment and government spending can be expected to shift the
A) aggregate expenditures curve downward and the aggregate demand curve leftward.
B) aggregate expenditures curve upward and the aggregate demand curve leftward.
C) aggregate expenditures curve downward and the aggregate demand curve rightward.
D) aggregate expenditures curve upward and the aggregate demand curve rightward.

Question

Quizplus · Accepted Answer

An increase in investment and government spending leads to an increase in aggregate expenditures, which will shift the aggregate expenditures curve upward. This increase in aggregate expenditures will also lead to an increase in aggregate demand, shifting the aggregate demand curve rightward. Therefore, choice D is the best answer.

An Increase in Investment and Government Spending Can Be Expected