Which Combination of Fiscal Policy Actions Would Most Likely Be

question 53

Multiple Choice

Which combination of fiscal policy actions would most likely be offsetting?

• A)increase in taxes and government spending
• B)decrease in taxes and increase in government spending
• C)increase in taxes, but make no change in government spending
• D)decrease in taxes, but make no change in government spending

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Definitions:

Additional Cost

The extra cost that is incurred when an economic agent decides to increase the level of an activity or purchase.

Labor Market

The marketplace in which individuals offer their labor for employment and employers seek to hire labor to fill available positions.

Resource Market

The market where resources or inputs such as labor, capital, and raw materials are bought and sold.

Rational Decision Maker

An individual or entity that makes choices that maximize benefits while minimizing costs, based on available information and logical analysis.