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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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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

✅ Answers (1)

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  • 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.
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Answered on June 25, 2020 6:20 pm

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