Several years ago, the United States went to war with Iraq. This led to an increase in government expenditures and a decrease in private consumption and investment. What is the total effect of these circumstances on aggregate demand?

When the government increases the level of government purchases it will shift the aggregate demand curve to the right. But at the same time a decrease in private consumption and private investment will lower total aggregate demand. Private consumption is far more important and larger than government spending.

The war with Iraq also increased the national deficit and total national debt, which increases the total amount that the government must pay in interests for the national debt, which also lowers aggregate demand since a large portion of the national debt is held by foreign investors.