Question

As per principle of elasticity the public expenditure during recession should be

Answer 1

The Principle of Elasticity: The principle of elasticity requires that public expenditure should not in any way be rigidly fixed for all times. It should be rather fairly elastic. The public authorities should be in a position to vary the expenditure as the situation demands. During the period of depression, it should be possible for the government to increase the expenditure so that economy is lifted from low level of employment. During boom period, the state should be in a position to curtail the expenditure without causing any distress to the people.