An increase in government expenditure will lead to?

An increase in government expenditure will lead to?

Answer Details

An increase in government expenditure will lead to an increase in the level of aggregate demand. When the government spends more, it injects more money into the economy, which leads to an increase in demand for goods and services. This, in turn, can lead to an increase in economic activity, such as production and employment. As a result, businesses may experience increased sales and profits, leading to increased economic growth. However, it may also lead to inflation if the increased demand leads to higher prices.