An increase in government expenditure on goods and services
A) decreases the aggregate quantity demanded.
B) increases aggregate demand.
C) decreases aggregate demand.
D) increases the aggregate quantity demanded.

Question

Quizplus · Accepted Answer

An increase in government expenditure on goods and services will increase aggregate demand as it increases the demand for goods and services in the economy. This leads to an increase in output and employment in the short run.

An Increase in Government Expenditure on Goods and Services