Which Combination of fiScal Policy Actions Would Most Likely Offset

question 191

Multiple Choice

Which combination of fiscal policy actions would most likely offset each other?

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

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Definitions:

Total Revenue

The total amount of money generated by a business from the sale of goods or services before any expenses are subtracted.

Marginal Cost

The change in total cost that arises when the quantity produced is incremented by one unit; essentially, it is the cost of producing one more unit of a good.

Output

The quantity of goods or services produced by a firm or economy.

Total Revenue Curve

A graphical representation that shows how total revenue changes as the quantity sold of a good or service changes, holding all other factors constant.