A fiscal policy cure for inflation might include
A)A reduction in government spending.
B)An increase in the reserve requirement.
C)Reductions in marginal tax rates for corporations and households.

Question

Quizplus · Accepted Answer

A reduction in government spending can help reduce inflationary pressures by decreasing demand in the economy. This can lead to lower prices as businesses reduce their prices to attract customers, thereby reducing inflation. An increase in the reserve requirement or reductions in marginal tax rates for corporations and households may not necessarily lead to a reduction in inflation, as they do not directly impact demand in the economy.

A Fiscal Policy Cure for Inflation Might Include