Which of the Following Is an Appropriate Fiscal Policy to Address

question 75

Multiple Choice

Which of the following is an appropriate fiscal policy to address the inflation that occurs when the economy is above potential GDP?

• A)Decrease taxes to protect consumers from the effects of inflation.
• B)Increase taxes to reduce aggregate demand.
• C)Increase government spending to provide some of the goods consumers can no longer afford at the higher prices.
• D)Decrease government spending so that the demand for money will fall.
• E)Increase transfer payments to poor people,who are hurt the most by the inflation.

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Definitions:

Kilocalories

A unit of energy measurement in food, commonly called calories, equivalent to 1000 true calories.

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A chronic condition where the pancreas produces little or no insulin, leading to high levels of glucose in the blood.

Saturated Fat

A type of dietary fat found in animal products and some plant oils, known to raise cholesterol levels and increase heart disease risk.

Nonnutritive Sweeteners

Artificial or natural sweeteners that provide little to no nutritional value but add sweetness to foods and drinks.