How does an increase in investment spending affect GDP in the context of fiscal policy?

When the government or businesses increase their investment spending, it can lead to a rise in the country's Gross Domestic Product (GDP). This happens because investment spending adds to the overall economic activity, creating jobs and increasing demand for goods and services. For example, if a company builds a new factory, it not only hires workers but also buys materials and equipment, which boosts other businesses too. As these new workers earn wages, they spend more money, further stimulating the economy. Overall, increased investment spending helps grow GDP by driving more economic interactions and boosting overall productivity.