Exams › SSC CGL (Prelims) › General

Assertion (A): Increase in government spending can raise aggregate demand in the economy. Reason (R): Government expenditure forms a component of aggregate demand.

1. Both A and R are true and R explains A
2. Both A and R are true but R does not explain A
3. A is true but R is false
4. A is false but R is true

Correct answer: Both A and R are true and R explains A

Solution

Both statements are true. Government expenditure is one of the components of aggregate demand, so an increase in government spending directly raises aggregate demand; hence R explains A.

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