An increase in government spending shifts aggregate demand
A)to the right.The larger the multiplier is,the farther it shifts.
B)to the right.The larger the multiplier is,the less it shifts.
C)to the left.The larger the multiplier is,the farther it shifts.
D)to the left.The larger the multiplier is,the less it shifts.

Question

Quizplus · Accepted Answer

An increase in government spending will shift the aggregate demand (AD) curve to the right. As more spending leads to more income, the multiplier effect will allow the shift to go further the larger the multiplier is. Therefore, choice A is correct.

An Increase in Government Spending Shifts Aggregate Demand