Question

How does public expenditure on infrastructure (e.g., roads, railways) typically affect the economy?

• A. It primarily leads to inflation without significant economic growth.
• B. It often results in a decrease in private sector investment due to crowding out.
• C. It promotes economic development by enhancing connectivity and efficiency.
• D. It has a negligible impact on the overall economy, as its benefits are localized.

Answer 1

Answer:

C. It promotes economic development by enhancing connectivity and efficiency.

• Investments in infrastructure reduce transaction costs, improve market access, and attract private businesses, all of which are catalysts for economic development.