If Policymakers Are Concerned That the Economy Is in Danger

question 85

Multiple Choice

If policymakers are concerned that the economy is in danger of rising inflation because aggregate demand is increasing faster than aggregate supply,the appropriate fiscal policy response is to

• A)increase taxes.
• B)increase government spending.
• C)use expansionary fiscal policy.
• D)increase interest rates.

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Definitions:

Digestive System

A group of organs and glands responsible for the breakdown of food into nutrients, which the body uses for energy, growth, and repair.

Endoderm

One of the three primary germ layers in the early embryo that develops into the interior linings of the digestive system and the respiratory system.

Cells

The basic structural, functional, and biological units of all known living organisms, acting as the building blocks of life.

Ectoderm

The outermost layer of cells in the early embryo from which the skin, nervous system, and sensory organs develop.