What would an increase in government spending cause, other things constant?
A) a leftward shift of the aggregate supply curve
B) a rightward shift of the aggregate supply curve
C) a leftward shift of the aggregate demand curve
D) a rightward shift of the aggregate demand curve

Question

What would an increase in government spending cause, other things constant?  
A) a leftward shift of the aggregate supply curve 
B) a rightward shift of the aggregate supply curve 
C) a leftward shift of the aggregate demand curve 
D) a rightward shift of the aggregate demand curve

Quizplus · Accepted Answer

An increase in government spending leads to an increase in aggregate demand as the government spends more on goods and services, leading to an increase in overall spending in the economy. This results in a rightward shift of the aggregate demand curve.

What Would an Increase in Government Spending Cause, Other Things