Which of the Following Measures Is Associated with an Expansionary

question 84

Multiple Choice

Which of the following measures is associated with an expansionary fiscal policy?

• A)lowering transfer payments
• B)lowering taxes
• C)lowering government purchases
• D)decreasing investments

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Definitions:

Liability Rule

A legal principle that allocates the economic burden of damages to the party responsible for causing harm.

Coase Theorem

A principle stating that if trade in an externality is possible and there are no transaction costs, parties will negotiate to produce an efficient outcome.

Free-Rider Problem

A situation in which individuals benefit from resources or services without paying for them, leading to underprovision of those goods.

External Costs

Costs created by an activity that affect other parties without them being reflected in the market prices, similar to negative externalities.