A decrease in government spending initially and primarily shifts
A)aggregate demand to the right.
B)aggregate demand to the left.
C)aggregate supply to the right.
D)neither aggregate demand nor aggregate supply.

Question

Quizplus · Accepted Answer

A decrease in government spending would lead to a decrease in government consumption and investment, which would lead to a decrease in aggregate demand, resulting in a shift of the aggregate demand curve to the left.

A Decrease in Government Spending Initially and Primarily Shifts