Fiscal policies such as increased government spending and reduced taxes will:
A) increase both unemployment and inflation.
B) reduce both unemployment and inflation.
C) increase inflation but reduce unemployment.
D) increase unemployment but reduce inflation.

Question

Quizplus · Accepted Answer

Increased government spending and reduced taxes are expansionary fiscal policies that typically stimulate economic activity, leading to lower unemployment but higher inflation.

Fiscal Policies Such as Increased Government Spending and Reduced Taxes