if-a-government-implements-a-large-infrastructure-project-what-is-the-likely-imp

Question

If a government implements a large infrastructure project, what is the likely impact on aggregate demand and why?

Accepted Answer

Aggregate demand increases due to higher government spending.

Answer

Aggregate demand decreases due to increased taxes.

Answer

Aggregate demand decreases due to reduced private investment.

Answer

Aggregate demand remains unchanged as infrastructure projects do not affect demand.