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never [62]
3 years ago
15

An increase in government spending initially and primarily shifts

Business
1 answer:
Ira Lisetskai [31]3 years ago
8 0

Answer:

The correct answer is option a.

Explanation:

The aggregate demand in an economy comprises of consumer spending, government spending, investment expenditure, and net exports.

An increase in any of these components will cause the aggregate demand to increase or decrease.

So when the government spending increases the aggregate demand will increase. This increase in the aggregate demand will cause the aggregate demand curve to shift to the right.

This rightward shift in the aggregate demand curve will cause the price level and equilibrium quantity to increase.

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