An increase in government spending initially and primarily shifts

aggregate demand right

aggregate demand left

aggregate supply right

neither aggregate demand nor aggregate supply

Expert Solution

Aggregate demand (AD) = Consumption + Government spending + Private Investment + Exports - Imports

As Government spending and AD have positive relationship with each other, rise in government spending will raise the AD and shifts the demand curve to its right and upward. Thus option A is correct.

Rahul Sunny answered 2 years ago

An increase in government spending initially and primarily shifts

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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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