Assume That Aggregate Demand in the Economy Is Excessive, Causing

question 174

Multiple Choice

Assume that aggregate demand in the economy is excessive, causing an inflationary gap.Which of the following would be most in accord with appropriate government fiscal policy?

• A)an increase in federal income tax rates
• B)an increase in the size of income tax exemptions for each dependent
• C)passage of legislation providing for the construction of 8,000 new post office buildings
• D)an increase in soil conservation subsidies to farmers

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Definitions:

Sherman Act

The Sherman Act is a foundational antitrust law in the United States that prohibits monopolistic practices and promotes competition.

Price Discrimination

A pricing strategy where identical or substantially similar goods or services are sold at different prices by the same provider in different markets.

Interlocking Directorates

When one person serves on the boards of at least two competing firms.

ALCOA Case

A landmark antitrust case in the United States involving the Aluminum Company of America, which set standards for monopolistic practices.