Suppose that the administration in charge of the government proposes closing military bases to reduce defense spending.
Aggregate demand (AD) components include consumption (C) , investment (I) , government purchases (G) , and net exports (NX) Analyze what the aggregate demand and aggregate supply model would predict here (assuming everything else remains the same) to answer the following questions:
Which component of AD is primarily affected
a. Government purchases (G)
b. Net exports (NX)
c. Consumption (C)
d. Investment (I)