Author Question: Which of the following would lead to stagflation? a. demand-pull inflation b. cost-push inflation ... (Read 124 times)

debasdf · **on:** Jun 30, 2018

Which of the following would lead to stagflation?
a. demand-pull inflation
b. cost-push inflation
c. both of the above
d. none of the above

Question 2

Suppose the equilibrium level of income exceeds the full employment level of income and there is high inflation. Hence, the government decides to implement a fiscal policy that will act to reduce national output and prices. This can be accomplished by:
a. increasing government spending such that aggregate expenditures are increased.
b. raising taxes and government spending by the same amount such that aggregate supply is decreased and aggregate demand is increased.
c. decreasing government spending such that aggregate demand is reduced.
d. lowering average tax rates such that aggregate supply is increased.
e. increasing transfer payments such that aggregate expenditures decline.