For a given inflation rate, if an increase in threats to domestic security causes the government to increase military spending, then the ______ shifts _____.
A) aggregate demand curve; right
B) aggregate demand curve; left
C) aggregate supply curve; upward
D) aggregate supply curve; downward

Question

Quizplus · Accepted Answer

An increase in military spending would increase government spending, leading to an increase in aggregate demand. Therefore, the aggregate demand curve would shift to the right.

For a Given Inflation Rate, If an Increase in Threats