A decrease in government expenditure shifts the AD curve ________ and a decrease in taxes shifts the AD curve ________.
A) rightward; rightward
B) rightward; leftward
C) leftward; rightward
D) leftward; leftward

Question

Quizplus · Accepted Answer

A decrease in government expenditure decreases aggregate demand, shifting the AD curve leftward. A decrease in taxes increases consumer spending, shifting the AD curve rightward.

A Decrease in Government Expenditure Shifts the AD Curve ________