📚 Learning Guide
Fiscal Policy and National Debt
easy

What is the primary purpose of government spending in terms of fiscal policy?

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Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
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Choose the Best Answer

A

To increase national debt

B

To stimulate economic growth

C

To reduce tax revenue

D

To control inflation

Understanding the Answer

Let's break down why this is correct

Answer

The primary purpose of government spending in fiscal policy is to influence the economy by managing the levels of demand and employment. When the government spends money, it can create jobs and increase demand for goods and services, which helps to stimulate economic growth. For example, if the government builds new schools, it not only provides jobs to construction workers but also improves education for children, leading to a stronger future workforce. Additionally, during times of economic downturn, increased government spending can help to boost consumer confidence and encourage spending by households. Overall, effective government spending aims to stabilize the economy and support citizens' well-being.

Detailed Explanation

Government spending helps boost the economy. Other options are incorrect because Some might think spending increases debt; It's a common belief that spending reduces tax income.

Key Concepts

Government spending
Topic

Fiscal Policy and National Debt

Difficulty

easy level question

Cognitive Level

understand

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