Government spending increases:Tax increases :: Increased aggregate demand: ?

When the government spends more money, it can lead to an increase in taxes to balance the budget. This relationship is similar to how increased government spending can lead to increased aggregate demand in the economy. When the government spends money, it puts more cash into the hands of consumers and businesses, which can lead to more spending and investment. For example, if the government builds a new school, it creates jobs for construction workers and teachers, who then spend their earnings on local businesses. This ripple effect shows how government spending can boost overall demand in the economy, similar to how tax increases might be needed to manage that spending.