Question

The country of Lilliput has low unemployment and high consumer spending, and small businesses are thriving. However, prices are starting to rise throughout the economy. What should Lilliput's government do to prevent inflation from happening? (5 points)

Lower the income tax, which gives citizens less money to spend, and buy services from civilian-owned businesses, which creates more jobs.
Lower the income tax, which gives citizens more money to spend, and buy more services from civilian-owned businesses, which creates more jobs.
Raise the income tax, which gives citizens less money to spend, and stop buying services from civilian-owned businesses, which eliminates jobs.
Raise the income tax, which gives citizens less money to spend, and buy more services from civilian-owned businesses, which creates more jobs.

Answer 1

Raise the income tax, which gives citizens less money to spend, and buy more services from civilian - owned businesses, which creates more jobs.

Step-by-step explanation:

To prevent inflation, Lilliput's government should raise the income tax, which gives citizens less money to spend and buys more services from a civilian-owned business, which creates more jobs.

In this way, it can increase employment and reduce consumer spending which in turn will prevent inflation.