Question

Suppose that the federal administration plans to fight a deep, ongoing recession with a nationwide plan of increasing infrastructure. Congress approves it and adjusts the budget accordingly to put the plan in motion immediately.

Answer 1

In the case above, what will happen to the level of government spending is an increase in it.

• The aggregate demand curve is one where the curve shifts to the right (an increase in AD).
• The level of unemployment will Decreases.

What is government Spending?

Government spending is known to be the process of the aggregate demand and it is one that functions as a tool to handle the recessionary issues.

Therefore, In the case above, what will happen to the level of government spending is an increase in it.

• The aggregate demand curve is one where the curve shifts to the right (an increase in AD).
• The level of unemployment will Decreases.

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