What Set of Fiscal Policies Could the Government Use to Close

question 11

Multiple Choice

What set of fiscal policies could the government use to close an expansionary gap?  

• A) decrease taxes, increase government purchases, and increase transfer payments 
• B) increase taxes, increase government purchases, and increase transfer payments 
• C) increase taxes, increase transfer payments, and decrease government purchases 
• D) increase taxes, decrease transfer payments, and decrease government purchases

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Definitions:

Sample Proportion

The ratio of members in a sample that have a particular attribute to the total number of members in that sample.

Test Statistic

A value calculated from sample data during a hypothesis test that determines whether to reject the null hypothesis.

Approximately Normal

Describes data that roughly follows a normal distribution, though it may not perfectly fit the normal curve.

Z Test Statistic

A type of statistical test where the test statistic follows a normal distribution under the null hypothesis.