The United States government's planned infrastructure spending under the Infrastructure
Investment and Jobs Act of 2021. The bill aims to invest approximately $1 trillion in various
types of infrastructure over a decade. As an economist, you are tasked to evaluate the potential
impact of this plan on the US economy given the current economic circumstances. Note: You
may need to evaluate economic circumstances in 2021 and think of the event as current time.
Calculate the potential impact on GDP using the concept of the multiplier. For the sake of this
exercise, assume an average multiplier effect of 1.5 (note: the actual multiplier effect can vary
depending on a number of factors).
Analyze the potential shifts in Aggregate Demand (AD) and Aggregate Supply (AS) curves that
might result from such spending.
Given the current economic climate (i.e., inflation rate, unemployment rate, real GDP growth
rate, etc.), discuss possible expenditure gaps that might arise from this policy.
How does this type of fiscal policy potentially impact different sectors of the economy (i.e.,
construction, manufacturing, transportation)?
