An increase in government expenditure on goods and services ________ aggregate demand,shifting the aggregate demand curve ________ and potentially bringing the ________ phase of the business cycle.
A)decreases;rightward;expansion
B)increases;rightward;recession
C)decreases;leftward;recession
D)increases;rightward;expansion
E)increases;leftward;recession

Question

Quizplus · Accepted Answer

An increase in government expenditure on goods and services increases aggregate demand, shifting the aggregate demand curve rightward and potentially bringing the expansion phase of the business cycle. This is because an increase in government expenditure leads to an increase in spending, which stimulates economic growth and increases demand for goods and services, leading to an expansionary phase of the business cycle.

An Increase in Government Expenditure on Goods and Services ________