If government expenditure on goods and services increase by​ $10 billion, then aggregate demand

Question: If government expenditure on goods and services increase by​ $10 billion, then aggregate demand

1. increases by​ $10 billion multiplied by the tax multiplier.
2. increases by​ $10 billion.
3. increases by​ $10 billion multiplied by the government expenditure multiplier.
4. decreases by​ $10 billion.
5. decreases by​ $10 billion multiplied by the government expenditure multiplier.

Answer and Explanation