Fiscal Policy Is Government Action to Influence Aggregate Demand and in Turn

question 21

Multiple Choice

Fiscal policy is government action to influence aggregate demand and in turn to influence the level of real GDP and the price level, through:

• A) expanding and contracting the money supply.
• B) regulation of net exports.
• C) changes in government spending and/or tax revenues.
• D) encouraging businesses to invest.

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Definitions:

Alert

A state of active attention and readiness to respond to potential threats or important occurrences.

Prefrontal Cortex

The front part of the frontal lobe of the brain, involved in complex behaviors including planning, decision making, moderating social behavior, and expressing personality.

Activation

The process of stimulating an action or behavior; in psychology, it refers to the arousal of the nervous system prompting mental and physical responses.

Delight

A high degree of pleasure or enjoyment; joy.