13. Typical problems with using fiscal policy to manipulate economic growth incl

Question

13.

Typical problems with using fiscal policy to manipulate economic growth include all but which one of the following?

It is often implemented too slowly due to political process

Government inefficiency and waste lead to low effectiveness

Poor means to fine tune an economy and can turn out to be inflationary

Is necessarily designed to benefit large firms rather than small firms

14.

regulations and controls; redistribute wealth among citizens

investment incentives and lower tax rates; allow the private sector

bailouts and compensation packages; allow financial firms

spending and higher taxes; allow the public sector

Typical problems with using fiscal policy to manipulate economic growth include all but which one of the following?

Explanation / Answer

Solution 13:

Is necessarily designed to benefit large firms rather than small firms

Fiscal policy is the government policy to manipulate economic growth and ensure smooth flow of economic activities. This is done through government spending, tax cut and new taxes etc. Thus economic growth is manipulated through government income and expenditure sources. None of the fiscal policies benefit large or small firms. It affects all the firms equally.

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