During an inflationary gap, it is a good strategy to inject spending into the economy.

Name: During an inflationary gap, it is a good strategy to inject spending into the economy.
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Question

Quizplus · Accepted Answer

Injecting more spending into the economy during an inflationary gap would further increase demand, which would lead to more inflation. Therefore, it is not a good strategy during this time. The appropriate strategy would be to decrease government spending or increase taxes to decrease aggregate demand and reduce inflation.

During an Inflationary Gap, It Is a Good Strategy to Inject