Question 38
MediumOriginal questionRead the two statements and choose the correct option.
I. Cutting taxes during a boom helps to control inflation.
II. Raising public spending on roads during a slump can raise income by more than the amount spent.
Show the answer and explanation
CorrectNot quiteAnswer B
Correct answer: B
Explanation
Tax cuts raise spending, which adds to inflation in a boom. I is false.
Government spending works through the multiplier. II is true.
- Concept
- Using fiscal policy
- Typical timeTypical
- 70 s
- Your timeYours
- —
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