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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

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)

To determine

Whether A tax increase on consumer income is solution of inflation or recession is to be determined.

Explanation

A tax increase on consumer income: An increase in tax-rate means decrease in disposable income...

b)

To determine

Whether A surge in military spending is a solution of inflation or recession is to be determined.

c)

To determine

WhetherA reduction in taxes for businesses that increase investment is a solution of inflation or recession is to be determined.

c)

To determine

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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