When the government increases spending without adjusting taxes, it typically leads to a decrease in the __________ for loanable funds, which can boost aggregate demand in the short run.

When the government increases spending without raising taxes, it often leads to a decrease in the supply of loanable funds. This happens because the government is borrowing money to finance its spending, which can make funds less available for others who want to borrow. As a result, the interest rates can rise due to higher demand for loans. However, in the short run, this increased government spending can boost aggregate demand, meaning more money is flowing into the economy, leading to more jobs and higher consumer spending. For example, if the government builds new schools, it creates jobs for construction workers and teachers, which puts more money into the local economy.