The purpose of fiscal stimulus is to shift aggregate:
A) Demand to the left.
B) Demand to the right.
C) Supply to the left.
D) Supply to the right.

Question

Quizplus · Accepted Answer

Fiscal stimulus refers to government spending increases or tax reductions aimed at increasing demand in the economy. The purpose of such policies is to shift aggregate demand to the right, thereby increasing economic output and employment. Thus, the best choice is B, which indicates a shift in demand to the right. Choices A, C, and D are incorrect as they all indicate a shift in either demand or supply to the left, which would have the opposite effect of fiscal stimulus.

The Purpose of Fiscal Stimulus Is to Shift Aggregate