Examine the economic implications of an increase in government investment expenditure when the economy is in a state of depression.

● The central government increases its investment expenditure to boost economic growth in times of depression.

● The consumer may reduce their expenditure which will reduce saving.

● The increased tax rate will not be of much help in this situation.

● The government will increase its investment expenditure which would lead to an increase in the overall unemployment situation of the country.

● The increased income will lead to an increase in consumption expenditure. the aggregate demand will rise.

● The government expenditure at the final stage may be manifold as compared to the expenditure at the initial stage.