During a period of deficient demand, which combination of policies is most suitable?

Lower government spending, higher taxes and a higher repo rateCorrect answerYour answerHigher taxes and a lower CRRCorrect answerYour answerA budget surplus and sales of securitiesCorrect answerYour answerHigher government spending, lower taxes and a lower repo rateCorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer D

Correct answer: D

All three raise AD: more public spending, more disposable income and cheaper credit.

Concept: Policy mix for a slump
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsMonetary measures

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Ten questions from Excess & Deficient Demand, at your own pace.

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During a period of deficient demand, which combination of policies is most suitable?

Explanation