If the government increases spending but does not raise taxes
A)aggregate demand will increase without any effect on the price level.
B)borrowing by the government will take place.
C)the government will have to sell some assets, such as oil and national parks.
D)the government will have to either lower expenditures or raise taxes the next year.

Question

Quizplus · Accepted Answer

When the government increases spending but does not raise taxes, it will result in borrowing by the government to finance the increased spending. The government could borrow from individuals or institutions by issuing bonds or through other means. This borrowing can lead to an increase in the government debt and interest payments, which can have long-term implications for the economy.

If the Government Increases Spending but Does Not Raise Taxes