Nearly all economists agree that increases in government spending can _____ aggregate _____.
A) increase; supply
B) decrease; supply
C) decrease; demand
D) increase; demand

Question

Quizplus · Accepted Answer

According to Keynesian economics, increases in government spending can lead to an increase in aggregate demand. This is because government spending injects money into the economy, which increases the overall level of spending in the economy. This increase in spending can then lead to an increase in output, employment, and prices. Therefore, the correct answer is D, which states that increases in government spending can increase aggregate demand.

Nearly All Economists Agree That Increases in Government Spending Can