Question

What difference does government expenditure make on total spending on goods and services in a country?

A. It decreases total spending
B. It has no effect on total spending
C. It increases total spending
D. It depends on other factors

Answer 1

C. It increases total spending

Step-by-step explanation:

Government expenditure refers to the amount of money a government spends on goods and services, public infrastructure, social programs, and other activities. When the government increases its spending, it injects more money into the economy, leading to an increase in total spending on goods and services. This is especially true in the context of Keynesian economics, where government spending is seen as a way to boost aggregate demand and stimulate economic activity, particularly during times of economic downturn.

Answer 2

Government expenditure can either increase or decrease total spending on goods and services in a country, depending on various factors. Increased government expenditure can inject more money into the economy and lead to higher total spending, while decreased expenditure can result in lower total spending. However, the impact of government expenditure also depends on other factors.

Step-by-step explanation:

Government expenditure has an impact on total spending on goods and services in a country as it can either increase or decrease total spending, depending on various factors. When the government increases its expenditure, it injects more money into the economy, leading to an increase in total spending. This can happen when the government invests in infrastructure projects, education, or provides financial support to specific groups.

On the other hand, if the government decreases its expenditure, it can reduce total spending. For example, if the government cuts funding to certain sectors or reduces welfare payments, it can result in a decrease in total spending.

It is important to note that the impact of government expenditure on total spending also depends on other factors, such as the overall economic conditions, consumer behavior, and the effectiveness of government policies.