Answer to Question #66841 in Macroeconomics for rabiya

Question #66841

1. The success of your forthcoming budget will be a crucial factor in the next election.

2. Do you expect next year’s demand to be so large that there will be a labour shortage or do you expect output to be so small that there will be unemployment?

3. I see that the National Institute has forecast unemployment on the basis of unchanged government policies. If this is the case, it is imperative that we adopt a policy to produce full employment next year.

4. It seems to me that we have to choose between increasing government expenditure or reducing taxations. We should choose the option which causes the smaller increase in the budget deficit.

5. You will of course ensure that the attainment of full employment does not run us into a balance of payments deficit.

Expert's answer

I expect next year’s demand to be so large that there will be a labour shortage, which will cause unemployment.
The other statements seem to be true.