in-the-ad-as-model-what-is-the-effect-of-increased-government-spending-on-aggreg

Question

In the AD-AS model, what is the effect of increased government spending on aggregate demand and price levels?

Accepted Answer

Aggregate demand shifts right, increasing price levels.

Answer

Aggregate demand shifts right, decreasing price levels.

Answer

Aggregate demand shifts left, decreasing price levels.

Answer

Aggregate demand remains unchanged, stabilizing price levels.