Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It decreases GDP
B
It has no effect on GDP
C
It increases GDP
D
It causes GDP to fluctuate uncontrollably
Understanding the Answer
Let's break down why this is correct
Answer
When investment spending increases, it usually leads to a rise in GDP, which stands for Gross Domestic Product. GDP measures the total value of all goods and services produced in a country. When businesses invest more money in things like new buildings, machinery, or technology, they are creating jobs and increasing production. For example, if a company builds a new factory, it not only employs workers but also contributes to the economy by producing more products. This overall growth in production and employment helps boost GDP, showing that more money is flowing through the economy.
Detailed Explanation
When businesses spend more money on things like new buildings or equipment, it helps the economy grow. Other options are incorrect because Some might think that spending less can help the economy; It might seem like spending doesn't change anything, but more investment means more activity in the economy, which raises GDP.
Key Concepts
economic growth
Topic
Investment Spending and GDP Change
Difficulty
easy level question
Cognitive Level
understand
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