Question

Over the years, the government of Montivia has focused on implementing programs that promote equality. On the short-term, though, Montivia legislators are concerned about the very slow rate of growth that has plagued its national economy. In order to address this problem, the government is likely to:
A. Take control of more major industries.
B. Reduce taxes and cut back on some social programs.
C. Make sure to balance its budget.
D. Avoid the use of fiscal policies and reduce the supply of money in circulation.

Answer 1

Answer:

The correct answer to the following question is B) by reducing taxes and cut back on some social programs.

Explanation:

The government of Montivia is facing problem of slow economic growth rate ( in the short term ) , so to address this problem the government should cut taxes , which will allow the circulation of money in the economy to increase, which would then lead to increase in the investment because now people have more money and the interest rates would also fall, which will help in further growth of economy. Government can also decrease their spending on social programs , as they could use that money to invest in the public sector investment project, which will also allow the increase of money supply in the economy, which would then ultimately lead to increase in economic growth.