Answer to Question #97657 in Macroeconomics for Tiffany

Question

The economy is at full employment and an election is coming up. To make sure they’re all re-elected, various officials decide to increase government spending by $100 billion. Senator Graham says the money should be spent on improving education and transport systems. Senator Dole proposes building several very large Coast Guard training facilities in states that currently have none, including Kentucky, Nebraska, Nevada, and Arkansas.
a. What is the major difference between the spending plans of Senator Graham and Senator Dole?

Answer 1

The main difference is in the specifics of the goals. Dole's goal has clear answers to basic questions: What? - Investments Which direction? - coast guard education How? - construction of new educational institutions Where? - Kentucky, Nevada, Nebraska, Arkansas. While Graham’s proposal does not have such a specificity, moreover, it is proposed to spend the money in two industries, and not one.