According to aggregate demand and supply analysis,an increase in government spending will cause aggregate demand to ________,causing output to ________ ,everything else held constant.
A)increase; fall
B)increase; rise
C)decrease; fall
D)decrease; rise

Question

Quizplus · Accepted Answer

An increase in government spending will increase aggregate demand, as it increases the demand for goods and services. This increase in demand will lead to an increase in output, as firms will produce more to meet the higher demand. Therefore, the correct choice is B.

According to Aggregate Demand and Supply Analysis,an Increase in Government