If government expenditure on goods and services increase by $100 billion,then aggregate demand
A)increases by $100 billion.
B)increases by less than $100 billion.
C)increases by more than $100 billion.
D)remains unchanged.
E)decreases by more than $100 billion.

Question

Quizplus · Accepted Answer

An increase in government expenditure on goods and services typically leads to a multiplier effect, where the initial spending leads to increased income and consumption, causing aggregate demand to increase by more than the initial $100 billion.

If Government Expenditure on Goods and Services Increase by $100