Question

1. True or false: In order to makntain a healhy and stable economy the US government can increase taxes to slow down the economy and they can lower taxes to stimulate the economy

2. True of fase: in order to maintain a healthy and stable economy the federal reserve can increase rates to slow down the economy and they can lower interest rates to stimulate the economy

Answer 1

1. True. In order to maintain healthy and stable economy the US government uses fiscal policy to increase or decrease the tax rate. Generally US government increase the tax rate to curb/reduce inflationary gap and decrease the tax rate to curb deflationary gap.

2. True, In order to maintain the healthy and stable economy US government uses monetary policy to change fedral reserve requirement. Generally US central bank increases the interest rate to reduce the inflationary gap and decrease the interest rate to reduce the diflationary gap.