Spending on the national defence force is categorised as government purchases. How do increases in spending on defence affect the aggregate demand curve?
A)This will move the economy up along a stationary aggregate demand curve.
B)This will move the economy down along a stationary aggregate demand curve.
C)This will shift the aggregate demand curve to the left.
D)This will shift the aggregate demand curve to the right.

Question

Quizplus · Accepted Answer

Increases in spending on national defence will lead to an increase in government purchases, which is one of the components of aggregate demand. This will shift the aggregate demand curve to the right, indicating an increase in overall demand in the economy.

Spending on the National Defence Force Is Categorised as Government