If government spending is increased,
A) we move upward along an unchanged Ap demand line.
B) we move downward along an unchanged Ap demand line.
C) the Ap line shifts to the right.
D) the Ap line shifts to the left.

Question

Quizplus · Accepted Answer

When government spending is increased, this injects more money into the economy, increasing aggregate demand (Ap). This shift can be illustrated by a rightward shift of the Ap line.

If Government Spending Is Increased