[Related to the Chapter Opener on page 560] In 2017, in
proposing a $1 trillion increase in government spending
on infrastructure, President Trump argued that the spending would increase total employment in the United States.
a. Will increases in federal spending always increase real
GDP and employment in the short run? Briefly explain.
b. Are there circumstances in which the federal government would not want to increase its spending, even if
the result was to increase real GDP and employment
in the short run?
Source: Ted Mann and Michael C. Bender, “President Trump to Launch
Push for Infrastructure Investment,” Wall Street Journal, June 4, 2017.