Suppose the Economy Experiences an Inflationary Gap

question 18

Multiple Choice

Suppose the economy experiences an inflationary gap. Policymakers who believe that
Government is too big would favor which of the following policies to close the gap?

• A) reduction in government spending
• B) increases in income tax rates
• C) increases in corporate tax rates
• D) increases in interest rates

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Definitions:

Relationships

Connections or associations between people, based on kinship, love, solidarity, professional interactions, or other social commitments.

Aronson and Carlsmith

Researchers known for their work in social psychology, particularly for studies on cognitive dissonance.

Punishment

Punishment involves the application of an adverse event or condition in response to unwanted behavior, aiming to reduce or eliminate that behavior.

Misbehave

To act out or behave badly, often violating social norms or expectations.