Which of the Following Fiscal Policy Actions Would Be Appropriate

question 226

Multiple Choice

Which of the following fiscal policy actions would be appropriate if the economy is experiencing an inflationary gap?

• A) An increase in government spending
• B) An increase in taxes
• C) A decrease in interest rates
• D) An increase in the money supply

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Definitions:

Price-Based Promotions

Marketing tactics that focus on temporarily reducing the price of products or services to increase demand and sales volume.

Penetration Pricing

A pricing strategy where the price of a product is initially set low to rapidly reach a wide fraction of the market and stimulate growth.

Price Sensitivity

The degree to which the price of a product affects consumers' buying behaviors or the demand for the product.

Substitution Risk

The potential loss or decrease in market share due to consumers opting for alternative products or services.