Answer to Question #108151 in Macroeconomics for December

Question

A. To boost economic growth the government is likely to...

1. Reduce personal income tax
2. Increase taxes
3. Provide incentives to save ( e.g. tax-free investment )
4. Increase minimum wages in the private sector

B. Inflation is likely to....

1. Reduce the cost of living
2. Raise the standard of living
3. Reduce the purchasing power of a currency
4. Increase the purchasing power of a currency

Answer 1

A)

To boost economic growth the government decreases taxes so that people have more money to spend , government also promotes tax free investment and Increase minimum wages in the private sector also boosts up the economy as people have more money to spend and invest

Hence the correct option is 1, 3 and 4

B)

Inflation reduces the value of a currency's purchasing power, having the effect of an increase in prices.

Hence the 3rd option is the correct option