Question

Why does the government reduce public expenditure?

• A. To increase spending capacity
• B. To improve employment
• C. To control inflation
• D. To reduce the circulation of money

Answer 1

The correct option is D To reduce the circulation of money

The expenditures made by the government enable money circulation in the economy. It reduces its public expenditure to reduce the circulation of money. This is done by postponing certain welfare schemes, reducing subsidies, or by reducing its own administrative expenses.