In 2001 a combination of tax cuts and increased defense spending did not have the same inflationary effect as the similar policy in the 1960s. Explain the difference.
What will be an ideal response?
The cut in taxes and increased defense spending represented a fiscal stimulus, but it came at a time when the economy was weakening due to other factors. The Federal Reserve also had a better understanding of the policy response needed to keep inflation low.
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If marginal utility is negative, total utility is negative
a. True b. False
If there is a surplus in the oil market, then the price of oil will:
A. rise. B. fall. C. remain unchanged. D. react unpredictably.
Points inside (below) the production possibilities frontier (PPF) are
What will be an ideal response?
Short-run contractionary Fiscal Policy would result in
A. aggregate demand moving to the right. B. aggregate demand moving to the left. C. aggregate supply moving to the left. D. aggregate supply moving to the right.