Answer to Question #210794 in Macroeconomics for Sahej

Question

Consider the following two headlines appearing in the same day Federal Government’s plan massive hospital construction programmes across the country and New discovery drives down production cost for firms . What will happen to the price levels and Real GDP in the economy in the short run ?

Answer 1

There will be a boost on the overall gross domestic product from financing of the projects through new federal government debt. The low costa of production for firms will again lower the price levels of commodities for consumers.