Use the Following to Answer Questions

question 300

Multiple Choice

Use the following to answer questions :
Scenario: Fiscal Policy
Consider the economy of Arcadia. Its households spend 75% of increases in their income. There are no taxes and no foreign trade. Its currency is the arc. Potential output is 600 billion arcs.
-(Scenario: Fiscal Policy) Look at the scenario Fiscal Policy. If actual output is 500 billion arcs, to restore the economy to potential output the government should _____ by 25 billion arcs.

• A)increase taxes
• B)decrease taxes
• C)increase spending
• D)decrease spending

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Definitions:

Harvesting Strategy

A business plan for obtaining the maximum possible benefit from a product, division, or market before it declines.

80-20 Rule

A principle that asserts that 80% of effects come from 20% of causes, often used in business to highlight the importance of focusing on key contributors to revenue or problems.

Market-product Grid

A matrix used to analyze and display the relationship between different markets and the products a company offers.

Statistical Data

Quantitative information collected and analyzed for the purpose of identifying patterns, trends, or insights.