Answer to Question #53159 in Macroeconomics for jim

Question

the fluctuations in the level of economic activities of a country over time are often best illustrated by business trade cycles. elaborate the role of government in dealing with the periodic fluctuations of economic activity over time

Answer 1

The state of economy is not the same all the time. Normally, there are always ups and downs.
Some experts believe that the government must stabilize and help the economy in bad times. It should lower taxes and interest rates so that people can borrow money more easily.
Today Keynes’ theory is widely accepted and modern countries combine capitalism with some kind of government control. The state may own industries that are important to the country’s economy, like oil wells, banks or airlines. Most people feel that free market economy should remain but the government should still be around to see that economic rules are kept.