Question

The growth rate of​ Zerbia, a small developing​ country, has fallen close to zero percent in the current year. Harry Miller and Jonathan​ Taylor, who are columnists with a business​ daily, are discussing suitable fiscal measures to revive economic growth in the country. Jonathan feels that the income tax rates in Zerbia are too high. Lower income tax rates would increase consumer spending and so would promote economic growth.​ Harry, on the other​ hand, believes that an increase in government expenditure would have a substantial impact on the​ country's GDP.​ Additionally, he feels that investing in green technology would not only accelerate​ growth, it is also likely to be more sustainable in the long term. Which of the following can most reasonably be inferred from the information given​ above?
A. Private investment in green technology industries in Zerbia has been negligible.
B. Jonathan believes that the tax structure is not progressive enough.
C. Harry thinks that the value of the government purchases multiplier is high.
D. The economy of Zerbia is in a recession.
E. Increase in government investment in infrastructure is likely to result in a higher
budget deficit than the policy measure suggested by Jonathan.

Answer 1

Answer:

Option C                                                

Explanation:

Clearly placed, the right response is obvious through the sentence 'Harry assumes, on the another side, that any improvement in governmental expenditures will have a huge effect on GDP.' Comparison is made with the result with utilizing the economic management instrument, that is, budget expenditures and taxation.

Thus, from the above we can conclude that the correct option is C.