Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Increased aggregate demand leading to job creation
B
Higher interest rates that discourage borrowing
C
A decrease in inflation due to reduced spending
D
A balanced budget resulting from increased tax revenues
Understanding the Answer
Let's break down why this is correct
Answer
When the government increases its spending on infrastructure projects during a recession, it puts more money into the economy. This spending creates jobs for workers who build roads, bridges, and schools. As these workers earn wages, they have more money to spend on things like food and clothing, which helps local businesses. For example, if a new highway is built, construction workers will spend their paychecks at nearby stores, boosting sales and helping those businesses stay open. Overall, this immediate effect can help reduce unemployment and encourage economic growth during tough times.
Detailed Explanation
When the government spends more on projects like roads and bridges, it creates jobs. Other options are incorrect because Some might think that government spending raises interest rates; It's a common belief that spending less lowers prices.
Key Concepts
Expansionary Fiscal Policy
Aggregate Demand
Economic Recession
Topic
Expansionary Fiscal and Monetary Policies
Difficulty
easy level question
Cognitive Level
understand
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