Assuming there are no supply- side effects, an increase in government expenditures the
AD curve and the SAS curve.
A) shifts rightward; does not shift
B) shifts rightward; shifts rightward
C) does not shift; does not shift
D) shifts leftward; shifts leftward

Question

Quizplus · Accepted Answer

An increase in government expenditures will result in an increase in aggregate demand, shifting the AD curve rightward. However, assuming there are no supply-side effects, there will be no change in the SAS curve.

Assuming There Are No Supply- Side Effects, an Increase in Government