Which of the Following Would Close an Inflationary Gap

question 35

Multiple Choice

Which of the following would close an inflationary gap?

• A)An increase in government spending.
• B)A decrease in government spending.
• C)A decrease in taxes.
• D)An increase in exports.

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Definitions:

Supply Curve

A graphical representation showing the relationship between the price of a good or service and the quantity of that good or service that suppliers are willing and able to provide in the market.

Canadian Goods

Products manufactured, produced, or grown in Canada.

Demand-for-Pounds Curve

A graphical representation showing the relationship between the exchange rate of the British Pound and the quantity of the Pound demanded by the market.

Downsloping

Describes a line or curve on a graph that moves from the upper left to the lower right, often used in economics to represent decrease.