In the aggregate expenditures model, an increase in government spending will:

Name: In the aggregate expenditures model, an increase in government spending will:
Brand: Quizplus
Rating: 4.8 (55 reviews)

Question

Quizplus · Accepted Answer

An increase in government spending will increase the aggregate demand, shifting the aggregate expenditures schedule upward. This will lead to an increase in output and employment as firms increase production to meet the higher demand. Therefore, choice B is the correct answer.

In the Aggregate Expenditures Model, an Increase in Government Spending