In macroeconomic theory, how does an autonomous increase in government expenditure affect the aggregate demand curve, assuming all other factors remain constant?

💡 Solution & Explanation

An autonomous increase in government expenditure is a direct injection of spending into the circular flow of income, which multiplies through the economy and shifts the aggregate demand curve outward to the right at every given price level. Leftward shifts occur when government spending or other demand components contract. Price level changes alone cause movements along the curve rather than shifts in the curve itself.