Government borrowing from depository institutions tends to increase total income and spending in the economy.

Question

Quizplus · Accepted Answer

When the government borrows from depository institutions, it typically spends this borrowed money on various projects or programs, which increases overall demand in the economy. This increase in demand leads to higher income and spending levels as businesses ramp up production to meet the increased demand, thereby stimulating economic activity.

Government Borrowing from Depository Institutions Tends to Increase Total Income