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QUESTION: Evaluate whether an increase in government spending on infrastructure would always increase rGDP.
1. Draw an AD and LRAS diagram showing the impact of increased government spending on infrastructure.
2. Analyse how increased government spending would affect AD. Link this to the diagram.
3. Analyse how increased government spending on infrastructure. would increase LRAS. Link this to the diagram.
4. Use the diagram and your answer to 3 and 2 analyse how increased investment would affect rGDP.
5. Evaluate how the impact on AD of increased government spending depends on whether or not governments have cut spending elsewhere to fund this.
6. Evaluate by explaining how the impact of infrastructure will take a long time to have an impact on LRAS.
7. Can you think of any other evaluation points that you could make?
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