Question

1. What should be the role of government in the economy? Defend your position with a compelling economic argument.
2. Does government fiscal policy work (taxes, spending)? Why or why not?

Answer 1

Government role should be that economic growth can be maintained. Government works through it fiscal policy and government should work through it economic growth can be achieved and there should be no increase in government debt.

Government with fiscal policy bring stability in the economy . In fiscal policy , at the time of recessions government increased government spending and reduce taxes to generate income and employment. In this sense government role is essential in every economy as it slows the fluctuations in business cycle.