During inflation,the optimal discretionary fiscal policy would be _____.
A)to decrease taxes
B)to increase government spending
C)to decrease the reserve ratio
D)to increase taxes
E)to decrease the market interest rate

Question

Quizplus · Accepted Answer

During inflation, the government should implement contractionary fiscal policy to reduce aggregate demand and decrease inflationary pressures. The optimal choice would be to increase taxes to reduce disposable income and decrease consumer spending. This would lead to reduced aggregate demand and help to control inflation.

During Inflation,the Optimal Discretionary Fiscal Policy Would Be _____