If the Government Wants to Close a GDP Gap, It

question 51

Multiple Choice

If the government wants to close a GDP gap, it should:

• A)borrow funds from the public by issuing bonds.
• B)lower taxes and raise government spending.
• C)lower government spending on social security.
• D)raise both direct and indirect tax rates.
• E)adopt contractionary fiscal policies to control inflation.

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Definitions:

Monopoly Model

A market structure characterized by a single seller facing no competition, influencing prices and quantities of the product or service offered.

Economic Profit

Profit or loss calculated by subtracting both explicit and implicit costs, such as opportunity costs, from total revenues, providing a clearer picture of a firm's financial performance.

Marginal Revenue

The additional income that a firm receives from selling one more unit of a good or service, crucial for decision-making in production levels.

Natural Monopoly

A market condition where a single firm can supply a product or service to an entire market at a lower cost than what would be possible if there were multiple firms due to economies of scale.