Question

When the government injects money into the economy, consumers may have less purchasing power, which may lead to

a)higher unemployment.
b)lower production.
c)higher production.
d)increases in taxes.

Answer 1

The answer would be, "Increase in taxes".

Answer 2

When the government injects money into the economy, consumers may have less purchasing power, which may lead to higher production. Option C is correct.

When the economy is slow, the government will inject the money in an attempt to boost the economy. Consequently, consumer will have more purchasing power that enables them to spend more in those goods and services they need. Hence, production in that country will increase.