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WAEC Economics 2011 Question 44

Question 44

Public Finance

A rise in government expenditure can lead to

  1. A.higher inflation.
  2. B.higher unemployment.
  3. C.lower profits for industries.
  4. D.lower importation of raw materials by industries.
Show the answer and explanation

Answer: A (higher inflation.)

Explanation

More government spending increases total demand, which can push prices up.