Suppose the government of Japan increases its expenditure on goods and services. In the short run, this increase will

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Quizplus · Accepted Answer

An increase in government expenditure on goods and services directly increases aggregate demand, as it is a component of total spending in the economy. This leads to a rightward shift in the Aggregate Demand (AD) curve, reflecting higher demand for goods and services at any given price level.

Suppose the Government of Japan Increases Its Expenditure on Goods