Would an increase in federal spending on the space program generate a multiplier effect on the U.S. economy? What impact would the additional spending have in Houston, Huntsville, Florida's, Space Coast, and similar areas with a heavy concentration of space facilities? What impact would higher taxes to finance the additional spending have in other areas of the country?
Would an increase in federal spending on the space program generate a multiplier effect on the U.S. economy? What impact would the additional spending have in Houston, Huntsville, Florida's, Space Coast, and similar areas with a heavy concentration of space facilities? What impact would higher taxes to finance the additional spending have in other areas of the country?
Increase in federal spending increases the supply of firms to cater the demand that is increased due to the rise of federal spending. Also it generates more employment opportunity and people will earn more income. Thus, the MPC (marginal propensity to consume) of people would increase and that become the income of other people. This chain activity will continues. Therefore, increase in federal spending on the space program creates multiplier effect in the economy.
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