a) A)What are government\'s fiscal policy options for ending severe demand-pull
ID: 1098781 • Letter: A
Question
a) A)What are government's fiscal policy options for ending severe demand-pull inflation?B) Use the aggregate demand-aggregate supply model to show the impact of these policies on the price level.
C) Which of these fiscal policy options do you think might be favored by a person who wants to preserve the size of government?
D) A person who thinks the public sector is too large? a) A)What are government's fiscal policy options for ending severe demand-pull inflation?
B) Use the aggregate demand-aggregate supply model to show the impact of these policies on the price level.
C) Which of these fiscal policy options do you think might be favored by a person who wants to preserve the size of government?
D) A person who thinks the public sector is too large?
Explanation / Answer
to shut down demand you need to somehow decrease consumption; either by the government or the private sector.
You can either
1) Cut government spending (this reduces the size of the government); or
2) Raise taxes (this decreases private sector consumption without reducing the size of the government).
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