If the index of leading indicators and other forecasting devices suggested that the economy is moving into an inflationary boom, activists' economic policy would call for
A) a decrease in money supply growth and a tax increase.
B) an increase in money supply growth and a shift toward a budget deficit.
C) an increase in money supply growth and a tax decrease.
D) a continuation of the policies already in place.

Question

Quizplus · Accepted Answer

Activists' economic policy would call for tight monetary and fiscal policies to slow down the economy and curb inflation. A decrease in money supply growth would reduce the availability of credit and limit the ability of consumers and businesses to spend. A tax increase would reduce disposable income and further dampen demand. These policies would help alleviate inflationary pressures and stabilize the economy.

If the Index of Leading Indicators and Other Forecasting Devices