Question 37
Public FinanceOne of the major effects of an increase in government expenditure on a nation's economy is that it
- A.creates investment opportunities for foreign investors
- B.leads to indigenization of the private sector
- C.raises the level of total tax revenue
- D.raises the level of aggregate demand
- E.controls the spread of monopoly.
Show the answer and explanation
Answer: D (raises the level of aggregate demand)
Explanation
Government spending is part of total spending, so raising it increases aggregate demand.