Which Policy Mix Serves Best to Encourage an Increase in Business

question 14

Multiple Choice

Which policy mix serves best to encourage an increase in business fixed investment?

• A)high government spending and low corporate income taxes
• B)high government spending and restrictive monetary policy
• C)high government spending and removal of investment tax credits
• D)low government spending and expansionary monetary policy
• E)income tax cuts and restrictive monetary policy

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Definitions:

Transaction Costs

The costs to individuals of making a deal.

Rent Controls

Government-imposed limits on the amount landlords can charge for renting out a property.

Equilibrium Rent

The rental price at which the quantity of rental property demanded equals the quantity supplied, leading to a market balance with no excess demand or supply.

Without Controls

In a context without controls, it refers to situations or experiments lacking regulation, restriction, or specific management, allowing outcomes to proceed naturally or freely.