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Questions and Answers
What can reduce demand-deficient unemployment and create new jobs in the long run?
What can reduce demand-deficient unemployment and create new jobs in the long run?
- Increase in government spending (correct)
- No effect of government spending on unemployment
- Decrease in government spending
- Increase in taxes
What can subsidies and grants for firms do?
What can subsidies and grants for firms do?
- Increase cost of production and decrease SRAS
- Increase demand-deficient unemployment
- Have no effect on cost of production and SRAS
- Reduce cost of production and increase SRAS (correct)
What is the importance of inclusive growth according to the text?
What is the importance of inclusive growth according to the text?
- It has no effect on income inequality and social welfare
- It can lead to unfair distribution of income and access to goods and services
- It can help reduce income inequality and promote social welfare (correct)
- It is not important for fair distribution of benefits of economic growth
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Study Notes
- Increase in government spending can achieve sustained economic growth and inclusive growth
- Infrastructure spending and transfer payments can help achieve this
- This can reduce demand-deficient unemployment and create new jobs in the long run
- Subsidies and grants for firms can reduce cost of production and increase SRAS, reducing unemployment
- Larger transfer payments to lower income consumers and smaller firms can lead to fairer distribution of income and access to goods and services
- Training workers and promoting employment of senior workers can create productive employment opportunities
- This can also reduce structural unemployment
- Government spending can help achieve both short-term and long-term goals
- Inclusive growth is important for fair distribution of benefits of economic growth
- These measures can help reduce income inequality and promote social welfare.
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