If a government increases its spending significantly during a recession, which of the following outcomes is most likely to occur in the short term, assuming the economy is operating below its potential output?

When a government increases its spending during a recession, it aims to boost economic activity by creating jobs and encouraging people to spend more money. This increased spending can lead to a higher demand for goods and services, which can help businesses grow and hire more workers. For example, if the government invests in building new roads, construction workers get jobs, and those workers will spend their earnings on local businesses. However, this increased spending may also lead to a budget deficit, meaning the government is spending more money than it collects in taxes. In the short term, while this can help the economy recover, it also creates a situation where the government may need to borrow money to cover the deficit.