Which One of the Following Is an Example of Discretionary

question 228

Multiple Choice

Which one of the following is an example of discretionary fiscal policy used to correct an inflationary gap?

• A) a tax increase passed into law by Congress
• B) decrease in the money supply by the Federal Reserve
• C) an increase in government expenditures approved by Congress
• D) an agreement among major banks to lower interest rates

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Definitions:

Diseconomies of Scope

The phenomenon where a company’s costs increase as it produces more varied types of products or services, due to inefficiencies.

Returns to Scale

The rate at which output increases as inputs are increased proportionately.

Economies of Scope

Cost advantages companies experience when they increase the variety of products produced, as opposed to increasing the volume of a single product (economies of scale).

Joint Cost Curve

Refers to a graph showing the costs shared by products in the process of being produced together up to a split-off point.