Aggregate demand Watch

lailapianai
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Hi, could anyone explain to me why government spending shift the aggregate demand curve to the right i.e increases the curve?

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natninja
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(Original post by lailapianai)
Hi, could anyone explain to me why government spending shift the aggregate demand curve to the right i.e increases the curve?

Thanks
Basically putting more cash into the economy (usually in the form of subsidies and the like). You can think of the govt. as a big big big consumer if that helps and think of govt. spending as similar to soncumer spending - in fact, a lot of money is spent by the govt. on consumables - but also on things like infrastructure, subsidies etc.
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