Answer :
The government of a country has decided to increase government spending in an attempt to expand the economy to the full-employment output level. The economy will eventually return to its previous level.
What is government spending?
Generally, When people talk about "government expenditure," they are referring to the money that is spent by the government on the purchase of products and the provision of services such as education, healthcare, social welfare, and defense.
The expenditures of the government are a component of the aggregate demand. The rise in aggregate demand will be caused by an increase in government expenditure. The curve that represents aggregate demand will begin to slope higher.
The aggregate demand curve, the aggregate supply curve for the short run, and the aggregate supply curve for the long run will all intersect at some point. The economy will eventually return to its previous level.
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