Some economists argue that the federal government should normally run a deficit at potential GDP,with the borrowed funds applied to
A)consumption goods.
B)investment goods.
C)social security benefits.
D)health care costs.

Question

Quizplus · Accepted Answer

The best choice would be to apply the borrowed funds to investment goods. This is because investment spending can lead to long-term economic growth through the creation of jobs, increased productivity, and improved technology. By using deficit spending to finance investment projects, the government can stimulate economic activity and increase potential GDP in the future. In contrast, using borrowed funds for consumption goods, social security benefits, or healthcare costs may not have the same positive impact on long-term economic growth.

Some Economists Argue That the Federal Government Should Normally Run