If government increases in its expenditure on public works, the desired effect is
a reduction in the use of capital equipment
an increase in the level of emploment
an increase in the level of inflation
an increase in the use of capital equipment
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the answer is C.
Increased government spending will result in increased aggregate demand, which then increases the real GDP, resulting in an rise in prices.
Option B.
Explanation: As a result of public expenditure,capacity to work and save tends to rise.Government expenditure provides various kinds of social and economic facilities stimulating the capacity to work of the people.Increased capacity implies increased efficiency and greater employment.
In any modern economy, Government spending is an important element of the total spending. It is also an important determinant of aggregate demand.
Usually, in lesser developed economies, the Govt. spending increases which invariably creates inflationary pressure on the economy.so the answer is (C)
