What Would an Increase in Government Spending Cause, Other Things

question 7

Multiple Choice

What would an increase in government spending cause, other things constant?  

• A) a leftward shift of the aggregate supply curve 
• B) a rightward shift of the aggregate supply curve 
• C) a leftward shift of the aggregate demand curve 
• D) a rightward shift of the aggregate demand curve

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Definitions:

Concept of Elasticity

An economic measure of the sensitivity of an economic variable, such as demand or supply, in response to a change in another variable, such as price.

Supply and Demand

Economic model of price determination in a market that concludes that the price of a good is determined by its availability (supply) and the desires of those with purchasing power (demand).

Broadly Defined Good

Broadly defined goods encompass a range of products or services that cater to a wide variety of needs and preferences in the market.

Available Substitutes

Alternative products or services that consumers can use in place of another product or service.