📚 Learning Guide
Fiscal Policy and Inflation Control
easy

Which of the following is a goal of fiscal policy aimed at controlling inflation?

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Learning Path

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Choose the Best Answer

A

Reducing government spending

B

Increasing taxes

C

Both A and B

D

Decreasing interest rates

Understanding the Answer

Let's break down why this is correct

Answer

A goal of fiscal policy aimed at controlling inflation is to reduce overall demand in the economy. When people and businesses spend less money, it can help slow down rising prices. For example, if the government decides to cut public spending or increase taxes, people will have less money to spend, which can help lower inflation. This is important because high inflation can make it harder for people to afford basic needs. Therefore, by adjusting spending and taxation, the government can work to keep prices stable and maintain a healthy economy.

Detailed Explanation

Fiscal policy aims to control inflation by reducing spending and increasing taxes. Other options are incorrect because Some might think cutting spending alone is enough to control inflation; People might believe that raising taxes alone will fix inflation.

Key Concepts

Fiscal policy
Topic

Fiscal Policy and Inflation Control

Difficulty

easy level question

Cognitive Level

understand

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