Which of the following shifts aggregate demand right? a. a decrease in government expenditures or an increase in the price level b. a decrease in the price level, but not an increase in government expenditures c. an increase in government expenditures or a decrease in the price level d. an increase in government expenditures, but not a change in the price leve

Which of the following shifts aggregate demand right?
a. a decrease in government expenditures or an increase in the price level
b. an increase in government expenditures, but not a change in the price level
c. an increase in government expenditures or a decrease in the price level
d. a decrease in the price level, but not an increase in government expenditures

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Answer

• an increase in government expenditures or a decrease in the price level
  Explanation:
  Government expenditure is a component of the aggregate demand, which has a direct effect on aggregate demand. When government expenditure increases, aggregate demand curve shifts rightward and vice versa is also true. On the other hand, a decrease in price level occurs when currency value increases, which increases the purchasing power of the currency and hence more consumer spending.