An expenditure-changing policy
A) alters the direction of the economy's total demand for goods and services.
B) alters the level of the economy's total demand for goods and services.
C) has no effect on aggregate demand.
D) is the same thing as an expenditure-switching policy.
E) affects aggregate supply but not aggregate demand.

Question

Quizplus · Accepted Answer

An expenditure-changing policy alters the level of the economy's total demand for goods and services by either increasing or decreasing government spending or taxes. This directly affects aggregate demand, as shifts in spending patterns affect the overall level of demand in the economy.

An Expenditure-Changing Policy