How does an increase in government spending typically affect aggregate demand and interest rates in an economy?

When the government increases its spending, it usually leads to a rise in aggregate demand, which is the total amount of goods and services people want to buy in an economy. This happens because government spending puts more money into the economy, allowing businesses to produce more and people to have more jobs. For example, if the government decides to build new roads, construction workers will be hired, and they will spend their wages on various goods and services, boosting demand. However, as demand increases, it can push up interest rates because the government may need to borrow money to fund its spending. Higher interest rates can make loans more expensive for everyone, which might slow down spending in other areas of the economy.