An increase in government spending without an accompanying increase in taxes
A)does not increase aggregate demand.
B)would effectively eliminate an inflationary gap.
C)causes investment spending to increase.
D)requires additional government borrowing.

Question

Quizplus · Accepted Answer

If there is an increase in government spending without a corresponding increase in taxes, it creates a budget deficit, which means the government will need to borrow. This borrowing will increase the national debt, which will have long-term consequences.

An Increase in Government Spending Without an Accompanying Increase in Taxes