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Government Sector In Nigeria Essay

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Answer
The government sector plays a major role in the economy. The spending, tax, and transfer policies of local, state, and federal agencies affect aggregate demand and aggregate supply and thus affect the level of real GDP and the price level. An expansionary policy tends to increase real GDP. Such a policy could be used to close a recessionary gap. A contractionary fiscal policy tends to reduce real GDP. A contractionary policy could be used to close an inflationary gap.
Presently, Nigeria is just out of recession which means that she need serious economic stimulus in order to boost her real GDP and per capital income. Iheanacho E (2016) suggests that the government could lower the business tax on buying new equipment. This would stimulate the economy because firms would have more money to invest which, in turn, increases demand in the …show more content…

An increase in government purchases shifts the aggregate demand curve by the amount of the initial change in government purchases times the multiplier. Changes in personal income taxes or in the level of transfer payments affect disposable personal income. They change consumption, though initially by less than the amount of the change in taxes or transfers. They thus cause somewhat smaller shifts in the aggregate demand curve than do equal changes in government purchases. Rittenberg, L. and Tregarthen, T. (2012)
References
Chibuike O. (n.d). Why Increased Government Spending May Not Stimulates Nigerians Economy. http://www.financialnigeria.com/why-increased-government-spending-may-not-stimulate-nigeria-s-economy-blog-225.html
Iheanacho E (2016) The Contribution of Government Expenditure on Economic Growth of Nigeria Disaggregated Approach. Int J Econ Manag Sci 5:369. doi: 10.4172/2162-6359.1000369
Investopedia n.d. Transfer Payment. Retrieved March 6, 2018 from

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