If policy makers believe that an inflationary boom is about to begin, the Keynesian view indicates that they should
A) increase the budget deficit.
B) increase government spending and hold taxes constant.
C) decrease government spending and/or raise taxes.
D) hold government spending constant and decrease taxes.

Question

Quizplus · Accepted Answer

The Keynesian view suggests that to counteract an inflationary boom, policy makers should decrease government spending and/or raise taxes to reduce aggregate demand and control inflation.

If Policy Makers Believe That an Inflationary Boom Is About