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MMLU / If the economy is operating at full employment which of the following policies…

Problem

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question

If the economy is operating at full employment which of the following policies will create the most inflation in the short run?

choices

  1. An increase in government spending matched by an equal increase in taxes
  2. An increase in government spending with no change in taxes
  3. A decrease in government spending and a matching increase in taxes
  4. A decrease in taxes with no change in government spending

subject

high_school_macroeconomics

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Source and history

Official source

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