An increase in government spending is MOST effective at improving aggregate demand when:
A) private sector spending is very low.
B) wages stay low.
C) banks are not lending.
D) consumers are increasing their spending.

Question

Quizplus · Accepted Answer

When private sector spending is very low, an increase in government spending can effectively boost aggregate demand by compensating for the lack of private sector activity.

An Increase in Government Spending Is MOST Effective at Improving