Question

Think about the possible costs and benefits of government intervention in this situation. A country’s economy has not seen economic growth in the past two years. In fact, last year the GDP fell, unemployment rose, and consumers were nervous that their paychecks wouldn’t be enough to cover their usual purchases and bills in the coming months. Then the government decided, in the hope of getting the economy going again, to spend billions of dollars on infrastructure projects such as road repair and high-speed rail installation. It also reduced taxes in an effort to give people more money. However, because the government is spending money on projects and has less money coming in because of the lower tax rates, several government programs have had their funding reduced and the country’s debt has increased. Should the government have intervened in the economy as it did? Justify your respo

Answer 1

Answer:

Yes, the government needs to take such steps during an economic crisis. Although the government’s actions increase the country’s debt and leads to a reduction in spending, its aim is to help the general populace cope with the situation. Without the government’s help, people would not be able to make their usual purchases and pay their bills. The GDP would then drop further because of a fall in consumer demand. Similarly, companies would need to lay off workers because of the decreased demand for consumer goods, which would further increase unemployment.

Explanation:

Answer 2

Answer:

You may have agreed or disagreed with the government intervention. Here is one possible response:

Yes, the government needs to take such steps during an economic crisis. Although the government’s actions increase the country’s debt and leads to a reduction in spending, its aim is to help the general populace cope with the situation. Without the government’s help, people would not be able to make their usual purchases and pay their bills. The GDP would then drop further because of a fall in consumer demand. Similarly, companies would need to lay off workers because of the decreased demand for consumer goods, which would further increase unemployment.

Explanation:

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