If an Economy Is in a Recession and the Government

Multiple Choice

If an economy is in a recession and the government opts for an expansionary fiscal policy to shift the AD curve closer to potential output, an economist with a typical functional finance view, who acknowledges partial crowding out, would conclude that the AD curve:

A) shifts to the right due to higher government spending.
B) shifts to the left due to higher government spending.
C) does not shift since the higher government spending is offset by higher private consumption.
D) does not shift since the higher government spending is offset by lower private consumption.