This document contains two economics questions about fiscal policy options to address different macroeconomic conditions. The first question asks which policy would help reduce an inflationary output gap: a) raising taxes, b) lowering taxes, c) increasing government spending, or d) decreasing government spending. The second question asks whether a proposal to increase spending and raise taxes at the same time during a recession would be: a) the worst option, b) the best option, c) a mediocre contradiction, or d) none of the above. For both questions, the document instructs the reader to select an answer and then explain their reasoning using economic terms like aggregate spending and GDP.

1. Complete the following and submit, either copy and paste or
type in your responses, see below:
1. Which of the following would help a government reduce an
inflationary output gap?
a. Raising taxes.
b. Lowering taxes.
c. Increasing government spending.
d. Decreasing government spending.
After selecting your responses to above question explain your
answers in detail, use economic terms (aggregate-spending,
production, income, employment...
What are the economic consequences, how would they influence
the four major sectors (C+I+G+Xn) and Real GDP?
2. The economy is in a recession. A congresswoman suggests
increasing spending to stimulate aggregate demand but also at
the same time raising taxes to pay for the increased spending.
Her suggestion to combine higher government expenditures with
higher taxes is:
a. The worst possible combination of tax and expenditure
changes.
b. The best possible combination of tax and expenditure
changes.
c. A mediocre and contradictory combination of tax and

2. expenditure changes.
d. None of the above.
After selecting your responses to question above explain your
answers in detail, use economic terms (aggregate-spending,
production, income, employment...
What are the economic consequences, how would they influence
the four major sectors (C+I+G+Xn) and Real GDP?
All assignments due end of day Thursday. However, don't
procrastinate, since you have to complete and submit
assignments and discussion responses each week.
Assignment due Thursday end of day.