Assume the economy is at full employment and that investment spending declines dramatically. If the goal is to restore full employment, government fiscal policy should be directed towardMultiple Choicean equality of tax receipts and government expenditures.a reduction of subsidies and transfer payments and an increase in tax rates.an excess of tax receipts over government expenditures.an excess of government expenditures over tax receipts.

The correct answer is: an excess of government expenditures over tax receipts.

Here's why:

When investment spending declines dramatically, it means that businesses are not investing in new capital, which can lead to a decrease in aggregate demand. This decrease in aggregate demand can lead to a decrease in output and employment, moving the economy away from full employment.

To counteract this, the government can use fiscal policy to increase aggregate demand. One way to do this is by increasing government expenditures or decreasing taxes, both of which would put more money into the hands of consumers and increase their spending. This increase in consumer spending would then increase aggregate demand, helping to move the economy back towards full employment.

Therefore, in this situation, government fiscal policy should be directed toward an excess of government expenditures over tax receipts. This is also known as a fiscal deficit, which is a tool that can be used to stimulate the economy during a downturn.