Answer to Question #210701 in Macroeconomics for vee

Question

consolidated government expenditure is expected to grow by 7.1 percent over the medium term, reaching R1.69 trillion in 2018/19. At this rate, spending growth will outpace inflation by 0.8 percent.

Answer 1

The utilized policies of various governments influence macroeconomic conditions, including

fiscal policy. Fiscal policy is usually designed to control inflation, impact unemployment, stabilize the business cycles, and influence rates of interest so as to control the economy. The main tools include public expenditures and tax rates. 

  The way the government might attempt using fiscal policy to influence the economy may be illustrated considering an economy experiencing a recession. The government can decide on lowering tax rate by 

 promoting economic growth. When people are paying less taxes, they will be having more income for investing and consuming. 

 Higher consumer investment or spending promotes the growth in the economy. However, 

 regulators never want to view excessive increases in the spending, as this can promote inflation. 

The other possibility is that the government may choose on increasing its expenditure, for example by developing more roads to increase its own expenditure. The concept tend to be that additional government spending creates job vacancies as it reduces unemployment rate.