When spending by the federal government exceeds net taxes,_____.
A)the price level tends to fall
B)the money supply must fall
C)the aggregate demand curve shifts rightward
D)aggregate supply moves rightward
E)there is a federal budget surplus

Question

Quizplus · Accepted Answer

When the federal government spends more than it collects in net taxes, it increases the total demand for goods and services in the economy, leading to a rightward shift in the aggregate demand curve. This is because the additional government spending directly increases aggregate demand.

When Spending by the Federal Government Exceeds Net Taxes,_____