Refer to Figure 9.1 for the following questions.
Figure 9.1

-How does a decrease in government spending affect the aggregate expenditure line in Figure 9.1?
A)It shifts the aggregate expenditure line upward.
B)It shifts the aggregate expenditure line downward.
C)It increases the slope of the aggregate expenditure line.
D)It decreases the slope of the aggregate expenditure line.

Question

Refer to Figure 9.1 for the following questions.
Figure 9.1
 
-How does a decrease in government spending affect the aggregate expenditure line in Figure 9.1?
A)It shifts the aggregate expenditure line upward. 
B)It shifts the aggregate expenditure line downward. 
C)It increases the slope of the aggregate expenditure line. 
D)It decreases the slope of the aggregate expenditure line.

Quizplus · Accepted Answer

A decrease in government spending would lead to a decrease in the portion of GDP that is accounted for by government spending. This results in a decrease in the overall level of aggregate expenditure in the economy, which shifts the aggregate expenditure line downward.

Refer to Figure 9.1 for the Following Questions