Everything else held constant,an increase in government spending ________ aggregate ________.
A)increases;demand
B)decreases;demand
C)decreases;supply
D)increases;supply

Question

Quizplus · Accepted Answer

An increase in government spending will increase aggregate demand because government spending is a component of the GDP equation (Y=C+I+G+NX). An increase in G will directly increase the overall level of spending in the economy, leading to an increase in aggregate demand.

Everything Else Held Constant,an Increase in Government Spending ________ Aggregate