An increase in government spending,other things constant,would cause a
A)leftward shift of the aggregate supply curve
B)rightward shift of the aggregate supply curve
C)leftward shift of the aggregate demand curve
D)rightward shift of the aggregate demand curve
E)movement toward equilibrium,along curves that do not shift

Question

Quizplus · Accepted Answer

An increase in government spending would increase demand for goods and services, which would shift the aggregate demand curve to the right. This is because government spending is a component of GDP and an increase in government spending would lead to an increase in overall spending in the economy. Therefore, the correct answer is D, a rightward shift of the aggregate demand curve.

An Increase in Government Spending,other Things Constant,would Cause a