The Effect of a Rise in Government Spending on Foreign Trade and Domestic Production

A rise in government spending is depicted in the saving-investment equilibrium graph by a downward shift of the S-Id curve. Press the Increase Spending button to increase government spending by 10. An increase in government spending by 10 will increase production by 20. The increase in government spending also results in a bigger current account deficit since point C is lower than point B. Click index when you are ready to return to the Key Graphs Index.