Correct Answer: Right

Solution : The correct answer is (a) right.

Government expenditure is one of the components of aggregate demand (AD), along with consumption, investment, and net exports. An increase in government expenditure means that the government is spending more on goods, services, infrastructure, or transfer payments.

When government expenditure increases, it directly adds to the total spending in the economy. This increase in spending leads to an increase in aggregate demand, shifting the aggregate demand curve to the right. The rightward shift indicates that at each price level, a higher quantity of goods and services is demanded.