Question

Which statement best describes why a government’s actions are important in macroeconomics? Check all that apply. Government controls industry through policy. Government is both a consumer and a producer. Government can prevent changes and challenges. Government can use policy to influence the economy. Government can accurately predict economic trends.

Answer 1

Answer:

Government controls industry through policy

Government is both a consumer and a producer

Government can use policy to influence the economy.

Answer 2

Answer:

• Government controls industry through policy
• Government is both a consumer and a producer
• Government can use policy to influence the economy.

Explanation:

The government can use fiscal policy to influence the economy. It adjusts taxes and spending to direct the economy in the desired direction.

As an institution, the government is a big spender in any economy. Government spending determines the level of production and consumption, which are key macroeconomic indicators.  

The government influences the monetary policies in place. By directing the monetary policies, the government controls the borrowing and expansion of businesses and industries.