In 2015, in proposing a $478 billion increase in federal spending on infrastructure, President Obama 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? What was President Obama assuming about the state of the economy in 2015?