Question

What are three economic stances that a government may have? Describe each of these stances.

2. What are the four different types of economic resources? Describe each type.

Answer 1

Three Economic Stances a government may have:

1. Neutral fiscal policy is usually undertaken when an economy is in equilibrium. The budget is balanced, meaning the government is taking in as much revenue as it is spending.

2. Expansionary fiscal policy involves government spending exceeding tax revenue, and is usually undertaken during recessions.

3. Contractionary fiscal policy occurs when government spending is lower than tax revenue, and is usually undertaken to pay down government debt.

Four Types of Economic Resources:

Land - natural resources e.g. soil, gold
Labour - human resources e.g. labour force
Capital - man made resources e.g machines
Enterprise - organises the above 3 and involves taking the risk of production in a free enterprise economy