What is the relationship between government spending, household consumption, and aggregate demand in the context of the multiplier effect?

• A. Government spending only affects aggregate supply, not aggregate demand.
• B. Increased government spending lowers household income, leading to lower consumption and a leftward shift in aggregate demand.
• C. Government spending has no impact on household consumption or aggregate demand.
• D. Increased government spending raises household income, leading to higher consumption and a rightward shift in aggregate demand.

Answer: (D)