ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A $1bn increase in government spending.
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A $1bn tax cut.
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Either A or B
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None of the above
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Detailed explanation-1: -Broadly speaking, there are two main sources of economic growth: growth in the size of the workforce and growth in the productivity (output per hour worked) of that workforce. Either can increase the overall size of the economy but only strong productivity growth can increase per capita GDP and income.
Detailed explanation-2: -According to Keynesian economics, increased government spending raises aggregate demand and increases consumption, which leads to increased production and faster recovery from recessions.
Detailed explanation-3: -The four essential economic activities are resource management, the production of goods and services, the distribution of goods and services, and the consumption of goods and services.
Detailed explanation-4: -The Budget impacts the economy, the financing cost, interest rates, and the securities exchanges. Exorbitant loan fees mean a greater expense of capital for the business, lower benefits, and subsequently lower stock rates. The fiscal measures that are embraced by the public authority influence public use.