In the summer of 1953, the Korean War ended and government expenditures decreased. In terms of the AS/AD model, this change should have:

Question

Quizplus · Accepted Answer

The end of the Korean War and the subsequent decrease in government expenditures would lead to a decrease in aggregate demand, as government spending is a component of aggregate demand. This would be represented in the AS/AD model by a leftward shift of the AD curve.

In the Summer of 1953, the Korean War Ended and Government