A decrease in government expenditure shifts the aggregate:
A) Supply curve to the left.
B) Supply curve to the right.
C) Demand curve to the left.
D) Demand curve to the right.

Question

Quizplus · Accepted Answer

A decrease in government expenditure reduces the overall demand in the economy because the government is spending less money on goods and services. This reduction in demand is represented by a leftward shift of the aggregate demand curve.

A Decrease in Government Expenditure Shifts the Aggregate