Looking for reliable answers? Westonci.ca is the ultimate Q&A platform where experts share their knowledge on various topics. Get immediate and reliable solutions to your questions from a community of experienced professionals on our platform. Experience the convenience of finding accurate answers to your questions from knowledgeable experts on our platform.
Sagot :
If Congress passed a tax increase at the request of the president to reduce the budget deficit, but the Fed held the money supply constant, then the two policies together would generally lead to option(a) i.e, lower income and a lower interest rate.
What is a budget deficit?
When ongoing expenses are higher than regular operating revenue, a budget deficit results. Budget deficits may result from specific unforeseen circumstances and initiatives. Tax increases and spending reductions are two ways that nations might deal with budget problems.
Inflation, or the ongoing rise in prices, is one of the main threats posed by a budget deficit. A budget deficit in the US may lead to the Federal Reserve releasing more money into the economy, which fuels inflation. Year after year, ongoing budget deficits may result in inflationary monetary policy.
The relationship between deficits and interest rates is more clearly demonstrated when the deficits are used to fund government spending than by tax reductions. If tax cut recipients save part of the money they receive from the tax cut, the impact of the tax cut on interest rates should be minimized.
To know more about budget deficits refer to: https://brainly.com/question/14181631
#SPJ4
The complete question is:
If Congress passed a tax increase at the request of the president to reduce the budget deficit, but the Fed
held the money supply constant, then the two policies together would generally lead to ______ income and
a ______ interest rate.
a) lower; lower
b) lower; higher
c) no change in; lower
d) no change in; higher
Visit us again for up-to-date and reliable answers. We're always ready to assist you with your informational needs. We hope this was helpful. Please come back whenever you need more information or answers to your queries. Keep exploring Westonci.ca for more insightful answers to your questions. We're here to help.