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Government can take advantage of the power of the multiplier and help reduce the unemployment rate by increasing Government Expenditures on goods and services or by reducing taxes. Between these two options that are available to the Government, which one is a better option? Consider some of these dimensions in your answer. What are the advantages and disadvantages of increasing expenditures versus reduction of taxes? Should the Government of Canada be selective in providing tax breaks to particular industries, sectors, or groups? Should the same strategy be used for tax reduction? Can you suggest any other ways that the Government can spend money to reduce the unemployment rate?

 

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