Which of the following is a consequence of increased federal government spending?

Increased federal government spending can lead to an increase in inflation as more money enters the economy. When the government injects more funds into the marketplace, it typically leads to higher demand for goods and services. If the supply of these goods and services does not increase at the same rate as demand, prices are likely to rise. This phenomenon occurs because consumers have more disposable income due to increased public spending, which can drive up demand and, consequently, prices.

This connection comes from basic economic principles surrounding demand-pull inflation, where greater demand, fueled by government spending, can exceed supply capabilities, leading to a general rise in price levels.

The other options do not directly follow as a primary consequence of increased federal spending. While increased spending can sometimes lead to higher interest rates due to potential government borrowing (which can occur to fund the spending), the most straightforward and immediate consequence is the impact on inflation. Unemployment can be affected by various market dynamics and does not inherently rise with increased government expenditure, especially if the funds create jobs. Similarly, the consumer price index is more a measure of inflation rather than a consequence of spending itself. Thus, the link between increased federal spending and inflation is the clearest outcome in this context.