In: Economics
Suppose a country that's currently experiencing a recessionary gap wishes to produce at its potential output level. Holding everything else constant, identify which of the following policy initiatives would surely be counter-productive. (Choose all that apply)
The government initiates policies that encourage private investment spending. |
||
The government lowers taxes but does not lower its spending. |
||
The government borrows money from the public and uses it to increase its own spending on infrastructure projects. A side effect of the increased borrowing is that interest rates rise. (On balance will the net effect of this policy surely be counter-productive?) |
||
The government increases taxes on consumers and corporations, but does not increase its own spending. |
||
The government authorizes new spending programs, but does not raise taxes to pay for the new spending. |