Question

review question (drag circle to correct answer) if a government is facing inflation, which fiscal policy action is most appropriate? a. increase government spending and decrease taxes b. decrease government spending and increase taxes c. keep government spending and faxes unchanged d. start using a strict money policy

Explanation:

Fiscal policy involves government spending and taxation. To combat inflation, reducing the money - supply in the economy is key. Decreasing government spending and increasing taxes reduces the amount of money in circulation, helping to lower inflation. Option d is a monetary policy, not fiscal.

Answer:

b. Decrease government spending and increase taxes