Principles of Economics 2e
Solutions
Principles of Economics 2e
In a Keynesian framework, using an AD/AS diagram, which of the following government policy choices offer a possible solution to recession? Which offer a possible solution to Inflation?
a. A tax Increase on consumer income.
b. A surge in military spending.
C. A reduction in (axes for businesses that Increase investment.
d. A major Increase in what the U.S. government spends on healthcare.
a)
Whether A tax increase on consumer income is solution of inflation or recession is to be determined.
A tax increase on consumer income: An increase in tax-rate means decrease in disposable income...
b)
Whether A surge in military spending is a solution of inflation or recession is to be determined.
c)
WhetherA reduction in taxes for businesses that increase investment is a solution of inflation or recession is to be determined.
c)
Whether Major reduction in what U.S. government spends on health care outlayis a solution of inflation or recession is to be determined.
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