If the Economy Is Experiencing Inflation, Then the Most Appropriate

question 62

Multiple Choice

If the economy is experiencing inflation, then the most appropriate government policy would be to:

• A) shift the aggregate demand curve by using a tax increase coupled with spending cuts.
• B) shift the aggregate demand curve by using a tax increase coupled with more spending.
• C) shift the aggregate demand curve by using a tax cut coupled with spending cuts.
• D) shift the aggregate supply curve by using a tax cut coupled with more spending.

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Definitions:

Experimental Group

In an experiment, the group that is exposed to the treatment, that is, to one version of the independent variable.

Independent Variable

A factor in a scientific study that is manipulated or changed to observe its effects on the dependent variable.

Cause-Effect Relationships

The principle stating that every effect in the natural world has a specific cause, and every cause leads to a specific effect.

The Experiment

A methodological approach in research to test hypotheses and establish causation by manipulating variables and observing the effects on a subject or system.