If the government wants to engage in fiscal policy to increase real GDP, it could
A) increase government expenditure in order to increase short-run aggregate supply.
B) decrease government expenditure in order to increase short-run aggregate supply.
C) increase government expenditure in order to increase aggregate demand.
D) decrease government expenditure in order to decrease aggregate demand.

Question

Quizplus · Accepted Answer

Increasing government expenditure is a fiscal policy tool used to increase aggregate demand, which can lead to an increase in real GDP in the short run.

If the Government Wants to Engage in Fiscal Policy to Increase