Question

1. What are three economic stances that a government may have?

Answer 1

1. Neutral fiscal policy is usually undertaken when an economy is in equilibrium. Government spending is fully funded by tax revenue and overall the budget outcome has a neutral effect on the level of economic activity. The budget is balanced, meaning the government is taking in as much revenue as it is spending.
2. Expansionary fiscal policy involves government spending exceeding tax revenue, and is usually undertaken during recessions. The USA right now! This is when a government spends more then it takes in, usually during a recession. The reason for this is becasue during a recession, no one has any money to spend, so the government creates jobs and stimuluses so that people will have money and then spend that money, thus boosting the economy.
3. Contractionary fiscal policy occurs when government spending is lower than tax revenue, and is usually undertaken to pay down government debt. Just like in france, Greece, Italy, Germany, and the UK--all in a recession that is much slower then our own. This is when a government decreases its spending. They do not create jobs or stimuluses to boost the economy, instead they don't spend any. All this does is slow growth and take out all the money in the economy. If the government won't spend their money, why would I want to?



hopefully this will help :)

Answer 2

WELCOME TO OPENSTUDY!! btw :)

Answer 3

thank you! :)