In the aggregate expenditures model, a decrease in government spending causes a(n):
A)upward shift in the aggregate expenditures curve.
B)downward shift in the aggregate expenditures curve.
C)shift in the 45-degree line.
D)rightward movement along the aggregate expenditures curve.
E)leftward movement along the aggregate expenditures curve.

Question

Quizplus · Accepted Answer

A decrease in government spending reduces overall aggregate expenditures, causing a downward shift in the aggregate expenditures curve.

In the Aggregate Expenditures Model, a Decrease in Government Spending