Your government is undertaking a new spending program of $800 billion. Explain what the effects would be under the following circumstances:

• The spending is used for current day consumption expenditures, such as providing the internet for each resident. The spending is paid for by higher taxes.
• The spending is used to build a nationwide transportation system. The spending is paid for by increased government taxes.

Explain each effect using the assumptions of a Keynesian economist and then under the assumption of a classical economist.

If using this activity as part of a small group, divide the group into Keynesian and classical economists and debate the answers.