Multiple Choice
Assume the economy is at full employment and prices are reasonably stable.If the government wants to increase spending for public schools,which of the following policies will have the least inflationary impact?
A) An increase in taxes by an amount greater than the increase in spending.
B) An increase in taxes by an amount smaller than the increase in spending.
C) An increase in taxes equal to the increase in spending.
D) No change in taxes when expenditures increase.
Correct Answer:
Verified
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