If the Federal Government Raises Government Expenditure

Multiple Choice

If the federal government raises government expenditure:

A) aggregate expenditure will fall, leading to a decrease in equilibrium GDP.
B) consumption and investment will increase, leading to a rise in aggregate expenditure and an increase in equilibrium GDP.
C) aggregate expenditure will rise, leading to an increase in equilibrium GDP.
D) the government will experience a budget deficit, which will lower aggregate expenditure.