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    businesseconomicseconomics questions and answersSuppose That The U.S. Government Increases Its Expenditure On Highways And Bridges By​ $100 ...

Question: Suppose That The U.S. Government Increases Its Expenditure On Highways And Bridges By​ $100 Billion.    As A Result Of This​ Expenditure, Aggregate Demand​ ______.    If The Economy Is In A​ Recession, Real GDP​ _______. A. Increases By More Than​ $100 Billion Because Consumption Expenditure Increases In A Multiplier​ Process; ...
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Suppose that the U.S. government increases its expenditure on highways and bridges by​ $100 billion.



As a result of this​ expenditure, aggregate demand​ ______.



If the economy is in a​ recession, real GDP​ _______.

A.

increases by more than​ $100 billion because consumption expenditure increases in a multiplier​ process;

increases

B.

increases by less than​ $100 billion because consumption expenditure​ decreases;

decreases

C.

increases by more than​ $100 billion because U.S. imports would decrease and people would spend more on​ U.S.-produced goods and​ services;

increases

D.

increases by​ $100 billion;

increases

E.

does not change because the increase in government expenditure would be matched by a decrease in private​ expenditure; does not change
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