Question

During a recession, what is the likely impact on the economy if the government increases its spending on public infrastructure projects?

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less competition among bidders for contracts

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creation of a federal budget surplus

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fewer environmental problems

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stimulated economic activity and growth

Answer 1

stimulated economic activity and growth

Explanation: Government infrastructure spending during a recession increases aggregate demand, creates jobs, and has multiplier effects that boost output and reduce unemployment (though it may raise the budget deficit).