An increase in government spending initially and primarily shifts

a. aggregate demand to the right.

b. aggregate demand to the left.

c. aggregate supply to the right.

d. neither aggregate demand nor aggregate supply in either direction.

Expert Solution

Option A

An increase in government spending initially and primarily shifts aggregate demand to the right.
Government spending refers to the government's expenditure on public sector services or for their own consumption or Investments.
When government increases its spending, the aggregate demand in the Economy increases due to decline in government taxes and cost of living.

Rahul Sunny answered 2 years ago

An increase in government spending initially and primarily shifts

An increase in government spending initially and primarily shifts aggregate demand right aggregate demand left aggregate supply right neither aggregate demand nor aggregate supply

An increase in government spending shifts aggregate demand

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An increase in government spending initially and primarily shifts

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An increase in government spending initially and primarily shifts

An increase in government spending shifts aggregate demand

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