Which of the Following Scenarios Will Result in the Largest

question 42

Multiple Choice

Which of the following scenarios will result in the largest reduction in inflation at the lowest cost in terms of a reduction in output?

• A)monetary restriction combined with fiscal expansion
• B)monetary restriction implemented after an oil price decrease
• C)monetary expansion combined with fiscal contraction
• D)a spending cut combined with a tax cut of equal magnitude
• E)a sharp reduction in monetary growth after an oil price increase

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Definitions:

Internal Locus

A psychological term referring to individuals who believe they can control their own destiny and outcomes through their actions.

Self-Confidence

The belief in one's own abilities and judgment, often leading to a positive and assertive attitude towards challenges and tasks.

High Energy

Describes a state of being vigorous and full of activity or vitality; it can also refer to physical systems having a high level of power or force.