Answer to Question #219455 in Microeconomics for darily

Question

"With the economy in recession, the government has decided to increase government spending. "

Explain, and illustrate(draw a graph), how monetary or fiscal policy would move the aggregate demand curve.

Answer 1

In this case, the Real GDP will begin to increase as everything will turn out positive. This comes as the price level will be increased, contributing to more income within the government.