Some economists argue that because increases in government spending crowd out LO

Question

Some economists argue that because increases in government spending crowd out

LOADING.. private spending, increased government spending will reduce the long-run growth rate of real GDP.

a. This is most likely to happen if the private spending being crowded out is investment spending

b. In terms of its effect on the long-run growth rate of real GDP, it is likely to matter more if the additional government spending involves

A.

increased spending on the national parks.

B.

increased spending on highways and bridges.

C.

both would have the same impact on long-run growth in real GDP.

D.

neither matters to long-run growth in real GDP

.

Explanation / Answer

B. increased spending on highways and bridges.

In terms of its effect of long run growth ratw if the real GDP spending on highways and bridges will impact the most as, highways and bridges creates connectivity and easy transportation which makes mobility of labour, technology easier. Hence, everyone can get all kind of benefits.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.