Question

When the government increases its spending and/or decreases tax rates, it can _____. This may conflict with the Federal Reserve's goal of _____.

a.) lower inflation, shrinking the economy
b.) shrink the economy, raising prices
c.) encourage economic growth, lowering inflation

Answer 1

C) encourage economic growth, lowering inflation

Step-by-step explanation:

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Answer 2

When the government increases its spending and/or decreases tax rates, it can encourage economic growth. this may conflict with the federal reserve's goal of lowering inflation.

Whenever you increase spending or decrease tax rates that will grow the economy. This happens because there is more money to be invested and that invested money will pay itself off down the line. When the economy grows as a result of a cut in taxes that can lead to inflation. Lower taxes increase disposable income and that can destabilize the worth of money.