Explain how an increase in government expenditure designed to increase aggregate demand can increase potential GDP and aggregate supply

What will be an ideal response?

Some types of government expenditure provide goods and services that increase the nation's production possibilities. For instance, additional government spending on law and order, public education, public health, social infrastructure such as roads and bridges, and productive capital all increase the economy's production possibilities. So an increase in government expenditure that provides these goods and services all increase potential GDP and increase aggregate supply.