The 2008 and 2009 Tax Cuts and the Increase in Government

question 69

Multiple Choice

The 2008 and 2009 tax cuts and the increase in government spending that occurred at the same time did not have the same inflationary impact as the similar policy in the 1960s because:

• A) the fiscal stimulus came at a time when the economy was weakening due to other factors.
• B) monetary policymakers, having perceived the inflation risk, responded appropriately.
• C) aggregate demand was far below potential output.
• D) all of the answers provided are correct.

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Definitions:

Pus

A dense, green or yellow liquid found in diseased tissue, made up of deceased white blood cells, bacteria, and tissue remains.

Ossicles

Small bones in the middle ear that transmit sound vibrations from the eardrum to the inner ear.

Stirrup

A bone in the middle ear that transmits sound vibrations to the inner ear.

Eardrum

A thin membrane that separates the outer ear from the middle ear and vibrates in response to sound waves, also known as the tympanic membrane.