Considering Only Its Direct Effect on Income, Contractionary Fiscal Policy

question 123

Multiple Choice

Considering only its direct effect on income, contractionary fiscal policy tends to:

• A)increase income and imports, lowering the trade deficit.
• B)increase income and imports, raising the trade deficit.
• C)decrease income and imports, lowering the trade deficit.
• D)decrease income and imports, raising the trade deficit.

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Definitions:

Decision Tree Construction

The process of building a graphical representation of decisions and their possible consequences, outcomes, and related costs.

Capacity Decision

The process of determining the level of capacity needed to meet varying demands for a business's goods or services.

Demand Forecast

The process of estimating the future demand for a product or service based on historical data and trends.

Conditional Payoffs

The expected return or outcome associated with certain actions or decisions, which depend on specific conditions being met.