Answer to Question #309844 in Microeconomics for Vuvu

Question

Choose any one of the tools from Question 4.1.1 and elaborate on the application of this tool in your country. (6)

Answer 1

Choose any one of the tools from Question 4.1.1 and elaborate on the application of this tool in your country.

Our government during a recession uses expansionary fiscal policy to boost aggregate demand and boost economic growth by decreasing tax rates. Also, our government by Increasing government investment in the building of infrastructure like roads would boost jobs, which will raise consumer income, hence raising aggregate demand. In the short run, this may result in increased growth.