government spending

Question 1

The trade cycle

Answer 1

Decisions over government expenditure may be made in order to manage AD, and therefore regulate the trade cycle.

In a recession, the government may increase spending in order to increase demand to reduce unemployment.

Question 2

Fiscal policy

Answer 2

fiscal policy is the decisions about government spending and taxes and it will depend on the priorities of thegovernment. The level of government spending depends on what they lay out in their fiscal policy.

Question 3

trade cycle

reccession

Answer 3

Government spending also automatically rises during a recession as they have to spend more on unemployment benefits.

Question 4

trade cycle

boom

Answer 4

During booms, the government may decrease spending to decrease demand and reduce inflation.