If the government reduces spending ________.
A)the IS curve will shift to the right
B)output will increase if interest rates remain fixed
C)consumption will increase
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

When the government reduces spending, it typically leads to a decrease in aggregate demand, which would shift the IS curve to the left, not the right. This would likely lead to a decrease in output, especially if interest rates remain fixed, and not an increase in consumption.

If the Government Reduces Spending ________