The the government increases the level of government expenditure.If there is no change in the aggregate supply curve,then aggregate demand will ________,real GDP will ________,and the price level will ________.
A)increase;remain the same;increase
B)remain the same;increase;increase
C)increase;increase;increase
D)decrease;increase;increase
E)decrease;remain the same;decrease

Question

Quizplus · Accepted Answer

An increase in government expenditure will increase aggregate demand, as it is a component of GDP. If there is no change in aggregate supply, a shift in aggregate demand will result in an increase in real GDP and an increase in the price level. Therefore, Option C is the correct answer.

The the Government Increases the Level of Government Expenditure