Question

Adding a given level of government purchases to consumption and investment increases ________ by the level of ________.

Answer 1

Adding a given level of government purchases to consumption and investment increases expenditures by the level of government purchases.

Why does it happen?

• Increasing the level of purchases and consumption requires an increase in the number of materials purchased.
• This increase requires a larger budget because spending has increased.

With the increase in government spending, the level of purchases and consumption increases, but public spending also increases, especially at the level of purchases, as the demand for these materials will be greater.

All this increase will add to the population's social contribution to government spending, which can promote higher taxes and lower individual purchasing power.

Learn more about public spending:

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