If Japan spends $66 billion (half the total) on cash handouts and $66 billion on infrastructure projects, which of these expenditures would have the larger effect on equilibrium expenditure, other things remaining the same?

Question

Isabela Munoz

Business

22 November, 21:59

If Japan spends $66 billion (half the total) on cash handouts and $66 billion on infrastructure projects, which of these expenditures would have the larger effect on equilibrium expenditure, other things remaining the same?

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Answers (1)

Know the Answer?

Katelyn Wall · Answer 1

Options:

A. the spending on infrastructure projects and the cash handouts have an equal effect on equilibrium expenditure

B. the cash handouts has a greater effect on equilibrium expenditure than the spending on infrastructure projects

C. the cash handouts decreases equilibrium expenditure and the increase in spending on infrastructure projects increases equilibrium expenditure

D. the spending on infrastructure projects has a greater effect on equilibrium expenditure than the cash handouts

Answer:

Correct answer is option D.

Explanation:

The spending on infrastructure projects has a greater effect on equilibrium expenditure than the cash handouts