Question

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

higher inflation
higher inflation

higher employment
higher employment

growth in production
growth in production

growth in consumer spending
growth in consumer spending

Answer 1

Higher inflation.

Governments pursue expansionary spending to raise employment, production, and consumer spending; the undesirable side effect they most want to avoid is higher inflation because it erodes purchasing power and can destabilize the economy.