A country is experiencing both high unemployment and high inflation. What actions would a supporter of Supply Side fiscal policy suggest to fix the problem??
A. Increase both taxes and government spending
B. Decrease taxes and increase government spending
C. Decrease both taxes and government spending

B

Explanation:

It would be the answer choice B because of unemployment. Let's take away the high inflation for a minute. In order to have inflation in the first place, we would need people who are in urgent need of money. Without enough employment, people are obligated to raise the price to make a living. Your income is already cut by taxes, -- which, I bet would be high at this point -- so dropping them would give people a chance to save up enough to afford things, leading to more employment.

Now, to address increase government spending would be great not only for the long-term effects but for rapid growth of the country. We know now that the government has enough money because of high taxes, so the spending won't be a problem. (hopefully, this helps you! :)

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