Answer to Question #290438 in Economics for Mmm

Question

If the government paid for new infrastructure such as highways, schools, airports, and high speed internet, how much return should they expect in economic growth?

A. About as much as they spend

B. A multiplier of about 20 times greater return

C. A multiplier of about 5%

D. A cost of double their investment due to interest

Answer 1

If the government paid for new infrastructure such as highways, schools, airports, and high speed internet, then they should expect return in economic growth which depends on the size of multiplier. If the multiplier was 20, then they would receive a multiplier of about 20 times greater return.

So, the correct answer is B.