SIE Exam Question 146: Answer and Explanation

Question: 146

Which of the following would be associated with the government's efforts to slow down the economy?

I. Reduction in taxes

II. Reduction spending

III. Increase in taxes

IV. Increase in spending

• A. I and II
• B. II and III
• C. III and IV
• D. I and IV

Correct Answer: B

Explanation:

The government, in moving to slow down the economy, would reduce spending and increase taxes so as to reduce overall demand for goods and services and decrease the level of money that consumers have access to.