-In the above figure, if the economy initially is at point A and government expenditure increases, in the short run the economy will move to point A) B. B) A, that is, the equilibrium will NOT change. C) C. D) None of the above answers is correct.

Question

Quizplus · Accepted Answer

An increase in government expenditure typically shifts the aggregate demand curve to the right, moving the economy from point A to point B in the short run, assuming point B represents a higher level of output and price level.

-In the Above Figure, If the Economy Initially Is at Point