Suppose the equilibrium level of income exceeds the full employment level of income and there is high inflation.Hence, the government decides to implement a fiscal policy that will act to reducenational output and prices.This can be accomplished by:
A) increasing government spending such that aggregate expenditures are increased.
B) raising taxes and government spending by the same amount such that aggregate supply is decreased and aggregate demand is increased.
C) decreasing government spending such that aggregate demand is reduced.
D) lowering average tax rates such that aggregate supply is increased.
E) increasing transfer payments such that aggregate expenditures decline.
Correct Answer:
Verified
Q1: The sum of the unemployment rate and
Q2: Fiscal policy is most effective in controlling
Q4: If aggregate demand intersects aggregate supply in
Q5: Ceteris paribus, if the U.S.federal government reduces
Q6: The effect of an increase in government
Q7: Which of the following is not a
Q8: If the government wants to close a
Q9: The figure given below depicts the tax
Q10: If government spending in a country declines
Q11: Government spending equals the sum of _,
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents