All other things unchanged, an increase in government spending will
A) shift the aggregate demand curve to the right.
B) shift the aggregate demand curve to the left.
C) make the aggregate demand curve flatter.
D) make the aggregate demand curve steeper.

Question

Quizplus · Accepted Answer

An increase in government spending will increase aggregate demand since government spending is one component of total spending (Y = C + I + G + NX). This will shift the aggregate demand curve to the right.

All Other Things Unchanged, an Increase in Government Spending Will