Suppose the current rate of inflation is about 14% and there is an inflationarygap of $150 billion in the economy. Which of the following policies would bemost appropriate to reduce inflation if the marginal propensity to save (MPS)is equal to 0.05.A. Reduce government spending by $30 billionB. Reduce government spending by $50 billion.O C. Reduce government spending by $7.5 billionD. Reduce government spending by $150 billionOE. Reduce government spending by $25 billion

The government expenditure can influence the inflation rate. The government often want to introduce…

Suppose the current rate of inflation is about 14% and there is an inflationary gap of $150 billion in the economy. Which of the following policies would be most appropriate to reduce inflation if the marginal propensity to save (MPS) is equal to 0.05. OA. Reduce government spending by $30 billion B. Reduce government spending by $50 billion. C. Reduce government spending by $7.5 billion D. Reduce government spending by $150 billion OE. Reduce government spending by $25 billion

Suppose the current rate of inflation is about 14% and there is an inflationary gap of $150 billion in the economy. Which of the following policies would be most appropriate to reduce inflation if the marginal propensity to save (MPS) is equal to 0.05. OA. Reduce government spending by $30 billion B. Reduce government spending by $50 billion. C. Reduce government spending by $7.5 billion D. Reduce government spending by $150 billion OE. Reduce government spending by $25 billion

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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