If a government has a macro-economic policy objective of expanding the overall level of economic activity, which of the following measures would not be consistent with such an objective?
A、Increasing public expenditure
B、Lowering interest rates
C、Increasing taxation
A、Increasing public expenditure
B、Lowering interest rates
C、Increasing taxation
【参考答案及解析】
Rationale： Increasing taxation lowers demand in the economy because people have less of their own money after tax for consumption or savin以investment. Increasing public expenditure should increase the level of consumer demand. Decreasing taxation has the opposite effect. Lowering interest rates should stimulate investment (by companies) and consumer expenditure, even if only after a time lag.
Rationale： Increasing taxation lowers demand in the economy because people have less of their own money after tax for consumption or savin以investment. Increasing public expenditure should increase the level of consumer demand. Decreasing taxation has the opposite effect. Lowering interest rates should stimulate investment (by companies) and consumer expenditure, even if only after a time lag.