-Refer to the above diagram.The impact of the public sector on the equilibrium GDP:
A) is expansionary.
B) is contractionary.
C) is neutral.
D) cannot be determined from the information given.

Question

-Refer to the above diagram.The impact of the public sector on the equilibrium GDP:
A) is expansionary. 
B) is contractionary. 
C) is neutral. 
D) cannot be determined from the information given.

Quizplus · Accepted Answer

The public sector purchases goods and services, which increases aggregate demand and shifts the aggregate demand curve to the right. This leads to an increase in equilibrium GDP.

-Refer to the Above Diagram