The government can curb excessive aggregate demand(inflation)by_________________?
Correct answer: D. none of the above
- A. decreasing taxes on consumers
- B. increasing spending
- C. decreasing taxes on firms
- D. none of the above
Explanation
Excessive aggregate demand is reduced by contractionary fiscal policy, such as higher taxes or lower government spending. Every listed tax change would instead increase demand or aggregate supply, so none is suitable.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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