Macroeconomic Essay Example | Topics and Well Written Essays - 500 words

Macroeconomic - Essay ExampleThe shift of scarce resources from the private to the public sector would result in a budget deficit because the government would have to sum up the interest rates in order to capture the attention of the population to buy the debt. An increase in the government outlay in particular areas can also be an instrumental way of promoting technological innovation, the skills of the workforce and the social infrastructure. For instance an increase in government disbursal on transport infrastructure impart not only have a cumulative effect on the aggregate demand but will also promote productivity and competitiveness (Riley). Likewise, if the government spends more on education, it would have direct effects on the population, producing more educated individuals and a skillful workforce. An increase in the spending of the government would have a direct impact on the aggregate demand. Increased government spending would cause an increase in the aggregate dema nd, which would in turn have an impact on the entire economy. The increased AD would culminate in the rise in the fruit as well as the prices. Moreover over a long period of time, the increased government expenditure causes a fiscal policy multiplier, peculiar(prenominal) of increased consumer spending (Mankiw 484).