Question

Which of the following is a drawback of excessive public expenditure?

• A. It can stimulate economic growth and reduce unemployment.
• B. It may lead to a decrease in the overall tax burden.
• C. It can improve the efficiency of private sector operations.
• D. It may lead to inflation and an increase in public debt.

Answer 1

Answer:

D. It may lead to inflation and an increase in public debt.

• Excessive public spending can create excess demand, leading to inflation, and often requires increased borrowing, which raises public debt.