Which of the following policy options would tend to offset each other?
A)A decrease in the discount rate and a decrease in the reserve requirement.
B)An increase in the discount rate and a decrease in the tax rate.
C)An increase in the reserve requirement and an open market sale by the Fed.
D)An increase in the tax rate and a decrease in government spending.

Question

Quizplus · Accepted Answer

An increase in the discount rate (tightening monetary policy) and a decrease in the tax rate (expansionary fiscal policy) tend to offset each other as one restricts and the other stimulates economic activity.

Which of the Following Policy Options Would Tend to Offset