One problem is that in order to spend more,
What will be an ideal response?
the government has to raise taxes, borrow, or "print money." (Issues of how government finances its expenditures are discussed later in this chapter and in subsequent ones.) Raising taxes tends to counteract the expansionary effects of increased spending. Borrowing money creates deficits and raises long-term government debt that, as we will see, may or may not be a problem (these issues are discussed in depth in Chapter 16).
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An economy without monetary exchange is called
A) a primitive economy. B) a barter economy. C) a socialist economy. D) an autarky economy.
The Scarcity Principle applies to:
A. only market decisions, e.g., buying a car. B. only the poor. C. only non-market decisions, e.g., watching a sunset. D. all decisions.