The US government decides to follow expansionary fiscal policy. Congress is meeting in a late session on the last day before it breaks for vacation. One of the Representatives makes a​ statement, "It does not matter what we spend the money​ on, let's just pass the bill and go​ home."
Evaluate the accuracy of the​ Representative's belief by choosing either the correct affirmation or rebuttal below.
A.
It does matter what the government spends it on because it will shift either the long run aggregate supply curve or the aggregate demand curve.
B.
As long as there is an increase in government spending then the aggregate demand curve will always increase.
C.
It does matter what the government decides to purchase with the additional spending.
D.
An increase in government​ spending, as long as it is spent within the United​ States, will increase aggregate demand.
Part 2
In the extreme case of direct expenditure offsets the
A.
increase in government expenditures are smaller than the decrease in consumption.
B.
increase in government expenditures are larger than the the decrease in consumption.
C.
increase in government expenditures are matched by a decrease in consumption.