An increase in government spending initially and primarily shifts
A)aggregate demand right.
B)aggregate demand left.
C)aggregate supply right.
D)neither aggregate demand nor aggregate supply.

Question

Quizplus · Accepted Answer

An increase in government spending will increase demand for goods and services in the economy, which will shift aggregate demand to the right. This is because the government is increasing its own purchases, which leads to an increase in consumption and investment spending by households and businesses as well.

An Increase in Government Spending Initially and Primarily Shifts