An increase in government spending will cause
A)AD to increase (move to the right).
B)AD to decrease (move to the left).
C)AS to increase (move to down and to the right).
D)AS to decrease (move to up and to the left).

Question

Quizplus · Accepted Answer

An increase in government spending will lead to an increase in aggregate demand (AD) as more money is being injected into the economy, which will lead to greater spending and economic activity. This will cause the AD curve to shift to the right.

An Increase in Government Spending Will Cause