Fiscal Policy Is Likely to Fail to Correct Stagflation in an Economy

question 20

Multiple Choice

Fiscal policy is likely to fail to correct stagflation in an economy because _____

• A) it affects both the aggregate demand and supply, but only aggregate supply needs to be changed.
• B) it affects both the aggregate demand and supply, but only aggregate demand needs to be changed.
• C) it affects aggregate demand only, but aggregate supply also needs to changed.
• D) it affects aggregate supply only, but only aggregate demand needs to be changed.
• E) it affects either aggregate demand or aggregate supply, but both need to be changed simultaneously.

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Definitions:

Canada Revenue Agency

The federal agency responsible for the administration of tax laws for the Government of Canada and for most provinces and territories.

Tax Laws

Legislation that determines how much individuals and businesses must pay the government from their income and financial transactions.

Dividends

Payments made by a corporation to its shareholder members, representing a portion of the corporation's earnings.

Shareholders

Shareholders are individuals or institutions that legally own one or more shares of stock in a public or private corporation, making them partial owners of the company.