Scenario: It is the year 2035, and many people in the United States are very happy with the state of the economy.  Real GDP has risen steadily over the past year, unemployment is low, and workers are confident they will continue to be employed.  People are buying homes, refrigerators, cars, and everyday goods.  Inflation is rising though, and people are concerned that prices may be rising faster than their incomes.  Nonetheless, the stock market is rising and people remain confident.  Which of the following fiscal policy combinations by Congress would be appropriate to address this economic scenario?     Increase both taxes and government spending at the same time   Decrease both taxes and government spending at the same time   Increase taxes and decrease government spending   Decrease taxes and increase government spending

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Scenario: It is the year 2035, and many people in the United States are very happy with the state of the economy.  Real GDP has risen steadily over the past year, unemployment is low, and workers are confident they will continue to be employed.  People are buying homes, refrigerators, cars, and everyday goods.  Inflation is rising though, and people are concerned that prices may be rising faster than their incomes.  Nonetheless, the stock market is rising and people remain confident. 

Which of the following fiscal policy combinations by Congress would be appropriate to address this economic scenario?

 
 
  • Increase both taxes and government spending at the same time
     
  • Decrease both taxes and government spending at the same time
     
  • Increase taxes and decrease government spending
     
  • Decrease taxes and increase government spending
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