Increased government spending will not cause investments to not drop as much if:

Question

Quizplus · Accepted Answer

When the government increases spending, there is usually an increase in demand for goods and services. This can cause prices to rise, leading to inflation. The Federal Reserve can counteract this by increasing the money supply, which can help keep interest rates low and encourage investment. Therefore, if the Fed increases the money supply at the same time the federal government increases government spending, it can help prevent investments from dropping as much.

Increased Government Spending Will Not Cause Investments to Not Drop