If the economy having inflation or an Inflationary gap it can be removed by

A. Increasing Taxes

B. Decreasing Taxes

C. Buying Agricultural Items

D. None of these

Detail of Mcqs:

Policies that can reduce an inflationary gap include reductions in government spending, tax increases, bond and securities issues, interest rate increases, and transfer payment reductions. An inflationary gap measures the difference between the current level of real GDP and the GDP that would exist if an economy was operating at full employment. For the gap to be considered inflationary, the current real GDP must be higher than the potential GDP.

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