Assume the economy is at full employment and that investment spending declines dramatically.If the goal is to restore full employment, government fiscal policy should be directed toward:
A.an equality of tax receipts and government expenditures.
B.an excess of tax receipts over government expenditures.
C.an excess of government expenditures over tax receipts.
D.a reduction of subsidies and transfer payments and an increase in tax rates.

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30-11-2022
Business

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Assume the economy is at full employment and that investment spending declines dramatically.If the goal is to restore full employment, government fiscal policy should be directed toward:
A.an equality of tax receipts and government expenditures.
B.an excess of tax receipts over government expenditures.
C.an excess of government expenditures over tax receipts.
D.a reduction of subsidies and transfer payments and an increase in tax rates.

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qwapple qwapple · Answer 1 · 2022-12-03T10:24:01+01:00

If the goal is to restore full employment, government fiscal policy should be directed toward C) an excess of government expenditures over tax receipts

Fiscal policy is the use of public expenditure and taxation to affect the economy, particularly macroeconomic conditions. These include employment, inflation, economic expansion, and the total demand for goods and services.

The government may reduce tax rates or boost spending during a recession to boost demand and the economy. On the other hand, it can increase rates or reduce spending to slow down the economy in order to battle inflation.

Government spending can be increased or decreased in response to a decline in private sector spending in order to directly boost aggregate demand. The government can spend less and/or tax more to reduce aggregate demand when the private sector is overly enthusiastic and invests in new projects and consumes too much money too quickly.

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