Q. China and global GDP and Economic Growth

1. Under the expenditure approach, GDP is defined as C+I+G+X-M, where C is private consumption, I is private investment, G is government expenditure and X-M is exports minus imports (also referred to as net exports). Some policy makers argue that one way to increase GDP is to increase G, e.g., to build more roads and bridges. Provide an explanation for why an increase in G might fail to result in an increase in GDP.