Who is most interested in the economy running at full employment level of output? Is it the government? Why would it want to achieve this? How would it achieve it? Could anyone give me a hand with this? I’m writing an IB economics internal assessment and have come across this question. But you don’t have to be an IB student/teeacher to answer, I’m sure. Anyway, thank you in advance 🙂 🙂
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? Best Answer
Whereas personal agenda for financial strength MUST be based on ‘saving’, the Government and every mode of business establishment (Govt is also into a business in its own right and might, right?) would thrive on the ‘spending’ rather than saving, because if you save then it is an outgoing for them but if you spend then they get their income and GDP and long term sustainability sorted out. The maximum level of spending could be achieved when each person is able to spend a lot. Lavish spending is possible for the few in upper income segment, but casual spending by all is a good number cruncher also. Full employment level of output would enable all masses to contribute in the Spending and so feel good about it, at the same time Govts benefit too. So, its no doubt a Win Win situation the only downfall being the probable rise in inflation, which impacts the future value proposition.