Answer to Question #87986 in Macroeconomics for Martha

Question

Assume that as part of its 2018/2019 budget, the south African government has earmarked infrastructure development as one of its key focus area for the Fiscal year. Applying this information within the Keynesian framework, the unplanned increase in government spending will

Answer 1

Increasing consumption, investment, government spending, or net exports shifts the curve of planned expenditures upwards and promotes an equilibrium output growth. Reducing any of the components of aggregate demand shifts the curve of planned expenditures downwards, accompanied by a decline in employment and equilibrium output.