Question

If economy level of output and employment is under level of full employment , what are possible economic policy ( Fiscal or Monetary policy) you could suggest in helping economy return back to the level of full employment? Justify your answer.

Answer 1

Answer:

Fiscal  Policy

Explanation:

There are two ways to rise the employment levels through the Fiscal monetary policy: by the public debt and by the reduction of  taxes.

by the public debt, the government can borrow money to expand its total spending on goods and services across the entire in an effort to increase the aggregate production by the nation's firms. the grow of the national product also increases the income of the state, which will be able to reduce the average rate of taxation, it represents a higher net profit for companies, this fact  bring them the capacity to hire more people.

by the reduction of taxes, it is a direct way to motivate the employment because if companies have to pay less taxes, they will get a higher profit, then, they will have the monetary  capacity to hire more people.