How Does an Increase in Government Spending Affect the Aggregate

question 230

Multiple Choice

How does an increase in government spending affect the aggregate expenditure line?

• A)It shifts the aggregate expenditure line upward.
• B)It shifts the aggregate expenditure line downward.
• C)It increases the slope of the aggregate expenditure line.
• D)It decreases the slope of the aggregate expenditure line.

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Definitions:

Work in Process

Inventories that are currently in the production process and have not yet reached the final stage to be classified as finished goods.

Materials Costs

The costs associated with the raw materials and supplies used in the production of goods or services.

Conversion Cost

The total cost of converting raw materials into finished goods, including labor and overhead expenses.

Materials Cost

The total expense incurred for the raw materials that are used in the production of goods or services.