If the government increases expenditure without raising taxes this will


Asked by wiki @ in Business viewed by 304 People


If the government increases expenditure without raising​ taxes, this will

a. increase the budget deficit and require the government to borrow additional funds.
b. cause the interest rate to​ increase, thereby, reducing private investment and crowding out the private sector.
c. cause a decrease in the domestic exchange rate which will increase exports and decrease imports.
d. all of the above.
e. a and b only. click to select your answer.

Answered by wiki @


If the government increases expenditure without raising​ taxes, this will cause the interest rate to​ increase, thereby, reducing private investment and crowding out the private sector and cause a decrease in the domestic exchange rate which will increase exports and decrease imports. Expenditures is increasing the amount of money and money available to be spent. In this case, the government is increasing the amount of money that tis available to be spent but they aren't imposing taxes on consumers with the increase. 

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