Which of the Following Actions Is an Example of Fiscal

question 11

Multiple Choice

Which of the following actions is an example of fiscal policy that aims to stimulate economic activity?

• A) an increase in spending on road works
• B) a purchase of government securities in the open market
• C) elimination of certain income tax deductions
• D) a reduction in interest rates

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Definitions:

Fair Return Price

A fair return price is a price level set for a product or service that allows a company to cover its costs while earning a reasonable profit, often discussed in the context of regulated industries.

Herfindahl Index

A measure used to calculate the level of concentration in a market, indicating the competitiveness of the market.

Market Shares

The portion of a market controlled by a particular company or product, often expressed as a percentage of total sales in that market.

Legal Cartel Theory

A hypothesis that explores the conditions under which regulatory frameworks and laws allow for the existence and operation of cartels, which are otherwise illegal agreements among competitors to control prices or supply in a market.