Each question is introduced by stimulus material. In your answer you may refer to this material and/or to other examples that you have studied. India has experienced a relatively high economic growth rate in recent years. This growth has been driven by increases in government spending and exports, including exports of textiles. India's unemployment rate has, however, increased. The government is concerned that trying to reduce unemployment may increase India's inflation rate. Analyse how higher government spending could increase economic growth.

Coherent analysis which might include:
Higher government spending can increase total (aggregate)
demand / government spending is a component of GDP (1).
Higher government spending on education and training /
healthcare / infrastructure (1) can raise productivity / skills /
efficiency / quality of labour (1) attract MNCs (1) increase
productive potential (1) lower costs of production (1) increase
employment / reduce unemployment (1) lower prices (1)
increase output (1) increase exports (1).
Government spending on benefits (1) will increase
purchasing power of the poor (1) raising consumer
expenditure (1).
Increased government subsidies (1) could reduce costs of
production (1) increase investment (1) increase profits (1)
provide an incentive for firms to produce more (1).