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JAMB Economics 2011 Question 33

Question 33

Public Finance

A country embarks on deficit financing in order to

  1. A.increase revenue
  2. B.reduce aggregate demand
  3. C.curb inflation
  4. D.stimulate investment.
Show the answer and explanation

Answer: D (stimulate investment.)

Explanation

Spending more than revenue injects money into the economy, raising demand and encouraging investment and output.