Fema Employment
If the economy is at full employment and the government increases spending on defense programs?
which of the following actions will prevent inflationary pressures? a. Increase taxes by an amount greater than the increased defense spending b. Decrease the welfare program by an amount equal to the increase in defense spending c. Issue bonds to finance the defense spending d. decrease social security payments by an amount equal to the increase in defense spending. e. the government can avoid inflation simply by doing nothing.
Public Comments
- c. issue bonds to finance defense spending
- Increasing aggregate demand when the economy is already at full employment increases inflation. To prevent the increase, the government must keep aggregate demand stable or falling.
