An increase in government expenditures will shift the aggregate expenditures schedule ____ and ____ the equilibrium GDP.
A)upward; raise
B)downward; raise
C)downward; lower
D)upward; lower

Question

Quizplus · Accepted Answer

An increase in government expenditures will shift the aggregate expenditures schedule upward as there will be an increase in the overall demand for goods and services. This will also raise the equilibrium GDP as the increased demand will lead to an increase in production and output.

An Increase in Government Expenditures Will Shift the Aggregate Expenditures