ZuoTi.Pro
Question

Assume that the economy is booming, consumer spending is excessive, so that there is risk of...

Assume that the economy is booming, consumer spending is excessive, so that there is risk of demand-pull inflation. Which of the following would be most in accord with appropriate government fiscal policy?

Select one:

a. finance budget deficit by printing new money

b. an increase in Federal income tax rates and a cut in government spending

c. an increase in the size of income tax exemptions for each dependent

d. an increase in soil conservation subsidies to farmers and construction of new schools

business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

"B"

An increase in the federal income taxes and a cut in the government spending will shift the aggregate demand curve to the left and decrease the demand pull inflation.

0 0
Add a comment
Answer #2

SOLUTION :


OPTION b : an increase in the federal income tax and a cut in government spending



[ To cool the booming economy it is necessary to decrease consumer and government spending. This can be achieved by increasing tax rate which will reduce spendable income and control consumption. Decrease in government spending will decrease deficit and control money flow in the market. This will also cool down the economy. ]


answered by: Tulsiram Garg
0 0
Add a comment
Know the answer?
Add Answer to:
Assume that the economy is booming, consumer spending is excessive, so that there is risk of...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • If the economy is close to full employment, an increase in government spending may increase GDP...

    If the economy is close to full employment, an increase in government spending may increase GDP in the short run, but in the long run, this policy may: reduce investment in new capital. make domestic businesses less competitive in international markets if the dollar appreciates in value raise interest rates and reduce consumer expenditures on cars and new houses All of these options are correct Which of the following is considered contractionary fiscal policy? The government increases defense spending due...

  • Related to the Economics in Practice Federal government expenditures and receipts for the simple economy of...

    Related to the Economics in Practice Federal government expenditures and receipts for the simple economy of the nation of Topanga are listed in the table below. The government of Topanga would like to reduce the debt-to-GDP ratio, and the Finance Minister of Topanga has proposed the following: "The best way to reduce the debt-to-GDP ratio is to increase GDP, because with a larger GDP, the ratio will have to get smaller. I therefore propose that government expenditures be increased by...

  • Consider an economy in which taxes, planned investment, government spending on goods and services, and net...

    Consider an economy in which taxes, planned investment, government spending on goods and services, and net exports are autonomous, but consumption and planned investment change as the interest rate changes. You are given the following information concerning autonomous consumption, the marginal propensity to consume, planned investment, government purchases of goods and services, and net exports: Ca = 1,500 – 10r; c = 0.6; Ta = 1,800; Ip = 2,400 – 50r; G = 2,000; NX = -200 (a)Derive Ep and...

  • QUESTION 12 In the aggregate expenditure model if the government of Pasedonia decides to increase government...

    QUESTION 12 In the aggregate expenditure model if the government of Pasedonia decides to increase government spending by $ 100 billion and to finance this increase in government spending the government of Pasedonia increases taxes by $ 100 billion what effect will this have on the economy? (assume MPC=0.75) O A GDP stays the same OB GDP increases by $ 100 billion OC. GDP will increase by $ 400 billion D.GDP will decrease QUESTION 13 An example of an automatic...

  • i need answers as soon as possible QUESTION 12 In the aggregate expenditure model if the...

    i need answers as soon as possible QUESTION 12 In the aggregate expenditure model if the government of Pasedonia decides to increase government spending by $ 100 billion and to finance this increase in government spending the government of Pasedonia increases taxes by $ 100 billion what effect will this have on the economy? (assume MPC 0.75) O A GDP stays the same B. GDP increases by $ 100 billion OC. GDP will increase by $ 400 billion OD. GDP...

  • (d) The following is an extract from the national income data of a country in 2020....

    (d) The following is an extract from the national income data of a country in 2020. Study the extract and answer the questions that follow: The agricultural sector in 2020 produced foodstuffs, livestock, coffee and groundnuts worth GHȼ 1,151 million. Manufacturing, construction, mining, water and electricity produced GHȼ 1,035 million. Transport and communication, finance, insurance and government services contributed GHȼ 1,170 million. Farmers received GHȼ 350 million as subsidies while government collected GHȼ 390 million in indirect taxes. GHC150 million...

  • I just need the answers，not the explanations. O AI QUAD CAMERA O REDMI NOTE 8 PRO...

    I just need the answers，not the explanations. O AI QUAD CAMERA O REDMI NOTE 8 PRO Which of the following would be most likely to occur if there was in increase in the workforce participation rate with only some of the new participants being successful in finding a job! the number of unemployed and the unemployment rate would both rise the number of employed and the inflation rate would both rise the number of employed and the worldforce age would...

  • Multiple Choice: 1) Assume the MPC is 0.75 and lump sum taxes are collected by the government. What is the governm...

    Multiple Choice: 1) Assume the MPC is 0.75 and lump sum taxes are collected by the government. What is the government tax multiplier? A)-1.33 B) - 25 C) - 75 D) -4 E) -3 , which the recessionary gap. 2) During a Recession, the MPC tends to a) Increase, increases b) Decrease, decreases c Decrease, increases d) Increase, decreases 3) Suppose that the MPC is.75 and the US Federal Government reduces taxes by 10 million dollars. After 3 rounds of...

  • 1. In an economy which has a national income identity as the following; Y= C+ I + G + NX where C ...

    I need help with this. 1. In an economy which has a national income identity as the following; Y= C+ I + G + NX where C = 400 + 0.6 Yd,; 1 = 1000-4600 r, G-1240 T-200 +0.25 Y; NX-400-0.05Y-8 00 e ( ofcourse, Yd=Y-T) Where e- foreign currency/ domestic currency, and initially set at e 1.25+2.5R The money demand function is Md- 0.75 Y-7500 r, and money supply is set by the Central Bank at 450. All calculation...

  • Hi can you help make a summary about this short article and how it affects me...

    Hi can you help make a summary about this short article and how it affects me economically as US citizen ? Federal spending outpaced revenue by $317 billion over the first three months of fiscal 2019, according to the Congressional Budget Office.CreditSarah Silbiger/The New York Times Image Federal spending outpaced revenue by $317 billion over the first three months of fiscal 2019, according to the Congressional Budget Office.CreditCreditSarah Silbiger/The New York Times By Jim Tankersley Jan. 8, 2019 WASHINGTON —...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT