9
QuizMultiple Choice

Fiscal Policy: Spending

Question 9 • IL-Economics

Which of these effects of expansionary spending would a government most want to avoid?

Answer
h
higher employment
h
higher inflation
g
growth in production
g
growth in consumer spending

Explanation

Expansionary government spending is intended to boost demand, which can raise employment, production, and consumer spending. But if demand grows too quickly, prices may rise broadly, causing inflation. A government would generally want to avoid that harmful side effect, so the answer is higher inflation.

AI-written and checked against the verified answer.

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