The following table presents hypothetical data on inflation, unemployment, and pollution associated with various levels of government expenditure and taxation. A government decision maker is trying to determine the optimal level of government expenditures and taxation with each of the three columns being a possible option (policy options A, B, or C).

1. Compute the federal budget balance for each policy option.
2. What policy option would best accomplish each of the following goals?
1. Lowest taxes
2. Lowest pollution
3. Lowest inflation rate
4. Lowest unemployment rate
5. A balanced federal budget

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Pollcy Option в $ 900 Government expenditure $700 $800 $600 $800 $1,000 Тахes Inflation (Index) 1.00 1.04 1.15 Unemployment rate 10% 4% 3.5% 1.00 Pollution Index 1.80 2.00