Economics 9708 · AS & A Level · Fiscal policy

Fiscal policy — practice question

A government deals with cyclical changes in output by leaving tax rates and benefit rates unchanged. What is the government aiming to achieve by using this fiscal policy?

  • Ato allow automatic stabilisers to work
  • Bto keep output at the full employment level
  • Cto maintain a constant balanced budget
  • Dto ensure that its budget is in surplus over the trade cycle

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