Illustrate what factors might be responsible for situation

Assignment Help Business Economics

Reference no: EM1371300

Q. Assume that economy is already in a recession and both President and Congress have decided to do something to restore economy. Both agree that lowering taxes would not be a good idea, but do believe that it is in best interest of economy to increase government spending in defence, education & infrastructure.

President and Congress change budget accordingly, but after 18 months, GDP only increased by three quarters of expected amount. Illustrate what factors might be responsible for this situation?

Reference no: EM1371300

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