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 types of policies should the government employ to address the scenario above, and why? Expansionary economic policy because the economy needs to be sped up. Contractionary economic policy because the economy needs to be sped up. Expansionary economic policy because the economy needs to be slowed down. Contractionary economic policy because the economy needs to be slowed down.
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 types of policies should the government employ to address the scenario above, and why? Expansionary economic policy because the economy needs to be sped up. Contractionary economic policy because the economy needs to be sped up. Expansionary economic policy because the economy needs to be slowed down. Contractionary economic policy because the economy needs to be slowed down.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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
Which of the following types of policies should the government employ to address the scenario above, and why?
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Expansionary economic policy because the economy needs to be sped up.
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Contractionary economic policy because the economy needs to be sped up.
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Expansionary economic policy because the economy needs to be slowed down.
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Contractionary economic policy because the economy needs to be slowed down.
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