A fiscal policy designed for maximum stimulus of economic growth must discourage current ________ and thus makes for,at least in the short run,a ________ even income distribution.

Question

Quizplus · Accepted Answer

When a fiscal policy discourages current consumption, it means that individuals and households are not spending as much, which leads to a decrease in consumption expenditures. This decrease in consumption expenditure makes for a less even income distribution in the short run, as individuals and households with lower incomes may be hit hardest by the policy's effects. However, in the long-run, the policy may lead to increased investment and economic growth, which can eventually benefit all income levels.

A Fiscal Policy Designed for Maximum Stimulus of Economic Growth