A main reason the federal government may choose to spend would be the:

Question

Quizplus · Accepted Answer

The government may choose to spend in order to achieve full-employment GDP, which means ensuring that the economy is operating at its maximum potential with all available resources being utilized. This could involve investing in public projects such as infrastructure or providing stimulus to certain industries to create jobs and increase consumer spending. A decrease in real interest rates (A) could make borrowing cheaper, but does not necessarily justify increased government spending. Similarly, an increase in real interest rates (B) could make borrowing more expensive and could lead to decreased spending in certain areas, but does not impact the overall decision of the government to spend. The government also does not typically expect to earn a large return on its spending (D), as the goal is often to provide public goods and services and improve the overall health of the economy rather than generating profits.

A Main Reason the Federal Government May Choose to Spend