econ - Running Head GOVERNMENT SPENDING AND ITS ANALYSIS USING IS-LM MODEL GOVERNMENT SPENDING AND ITS ANALYSIS USING IS-LM MODEL Name Institution 1

econ - Running Head GOVERNMENT SPENDING AND ITS ANALYSIS...

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Running Head: GOVERNMENT SPENDING AND ITS ANALYSIS USING IS-LM MODEL 1GOVERNMENT SPENDING AND ITS ANALYSIS USING IS-LM MODELName:Institution:
GOVERNMENT SPENDING AND ITS ANALYSIS USING IS-LM MODEL 2Economic theories do not automatically deliver robust conclusion about the impact ofgovernment spending on the overall economic performance. In some cases, lower levels ofgovernment spending would sometimes enhance the economic growth. In other situations,increased government spending would also enhance economic growth hence desirable.Government spending is necessary for the economic stabilization of the nation. The economicgrowth is minimal when the government is not spending. However, at some point thegovernment spending becomes a burden. This may be as a result of misallocation of funds or thegovernment becomes too large.in this case, the government spending and cost outweighs thebenefits.Excessive government spending results to the extraction cost. The federal government will beforced to take loans to finance the big budgets. Borrowing devours capital which was available

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