An increase in government transfers is an example of _____fiscal policy because it shifts the aggregate demand curve to the _____ aggregate output.
A) expansionary; left, increasing
B) contractionary; left, decreasing
C) expansionary; right, increasing
D) contractionary; right, decreasing

Question

Quizplus · Accepted Answer

An increase in government transfers, a form of government spending, is an expansionary fiscal policy because it increases aggregate demand. This shift the aggregate demand curve to the right, resulting in an increase in aggregate output.

An Increase in Government Transfers Is an Example of _____Fiscal