Spending on the peace keeping missions is essentially categorized as government purchases.How do increases in spending on peace keeping 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.
E)This form of government spending will have no impact on the economy.

Question

Quizplus · Accepted Answer

Increases in spending on peace keeping missions will lead to an increase in government purchases, which will shift the aggregate demand curve to the right. This is because government purchases are a component of aggregate demand. As government spending increases, there will be an increase in demand for goods and services, leading to an increase in aggregate demand.

Spending on the Peace Keeping Missions Is Essentially Categorized as Government