Question

Which of these effects of expansionary spending would a government most want to avoid?

Answer 1

It is B, higher inflation

Answer 2

The correct answer is higher inflation.

Definitely, when using expansionary spending, a government most want to avoid inflation effects.

A government uses a expansionary spending when it increases government borrowing and sells bonds to the private companies.

An expansionary is considered a macroeconomic policy. Its purpose is to generate economic growth or a measure to combat inflation, doing four things: expanding the money supply, reduce interest rates, reduction of taxes, and increasing government spending.