The effect of expansionary ﬁscal policy is shown as a
A) rightward shift in the economy's aggregate demand curve.
B) movement along an existing aggregate demand curve.
C) leftward shift in the economy's aggregate supply curve.
D) leftward shift in the economy's aggregate demand curve.

Question

Quizplus · Accepted Answer

Expansionary fiscal policy involves increasing government spending and/or decreasing taxes. This leads to an increase in consumer and government spending, which in turn increases aggregate demand. The result is a rightward shift in the economy's aggregate demand curve.

The Effect of Expansionary ﬁScal Policy Is Shown as a