Which of the Following Fiscal Policy Actions Would Definitely Cause

question 4

Multiple Choice

Which of the following fiscal policy actions would definitely cause a reduction in the size of an inflationary gap?

• A)cuts in taxes and increases in government spending
• B)increases in government spending
• C)increases in taxes
• D)cuts in taxes

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Definitions:

Sales Salaries

Expenses associated with paying the salaries of sales personnel, typically classified under operating expenses in the income statement.

Medical Insurance

A type of insurance coverage that pays for an individual's medical and surgical expenses incurred from illness or injury, or reimburses the insured for expenses incurred from such incidents.

Unemployment Taxes

Taxes imposed on employers, based on the amount of wages paid to employees, used to fund unemployment compensation programs.

Gross Wages

The total amount of salary or wages earned by an employee before any deductions or taxes are applied.