Which of the following is an appropriate fiscal policy to address the inflation

Question

Which of the following is an appropriate fiscal policy to address the inflation that occurs when the economy is above potential GDP?

                Decrease taxes to protect consumers from the effects of inflation.

                Increase taxes to reduce aggregate demand.

                Increase government spending to provide some of the goods consumers can no longer afford at the higher prices.

                Decrease government spending so that the demand for money will fall.

                Increase transfer payments to poor people, who are hurt the most by the inflation.

Explanation / Answer

Increase taxes to reduce aggregate demand

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.