Which policy action increases injections into the economy?

Which policy action increases injections into the economy?

• A. Increase taxes on households
• B. Reduce exports
• C. Increase government spending on public works
• D. Raise interest rates

Answer: (C)

In macroeconomics, injections are additions to spending that boost aggregate demand. Increasing government spending on public works directly pumps money into the economy by buying goods and services, which creates income for workers and suppliers. As people earn this income, they spend more, lifting overall economic activity. This makes it an effective injection. The other actions don’t increase injections: higher taxes reduce households’ disposable income and curb consumption, lowering spending; reducing exports cuts demand from abroad, weakening injections; and raising interest rates makes borrowing and spending more costly, dampening investment and consumption.

In macroeconomics, injections are additions to spending that boost aggregate demand. Increasing government spending on public works directly pumps money into the economy by buying goods and services, which creates income for workers and suppliers. As people earn this income, they spend more, lifting overall economic activity. This makes it an effective injection.

The other actions don’t increase injections: higher taxes reduce households’ disposable income and curb consumption, lowering spending; reducing exports cuts demand from abroad, weakening injections; and raising interest rates makes borrowing and spending more costly, dampening investment and consumption.