Which of the Following Is an Example of a Fiscal

question 17

Multiple Choice

Which of the following is an example of a fiscal stimulus?

• A)decrease in government expenditure on goods and services
• B)decrease in transfer payments
• C)increase in taxes
• D)decrease in taxes
• E)none of the above

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Definitions:

Excess Capacity

A situation where a firm produces at a lower scale of output than it has been designed to handle.

Profit-Maximizing

The process of identifying the best level of output at which a company can produce goods or services to achieve the highest possible profit.

Product-Variety Externalities

Economic externalities that arise when the introduction of new products benefits consumers by providing a wider array of choices, potentially affecting their utility and the demand for various goods.

Business-Stealing

The negative impact on existing firms when new entrants to the market capture some of their market share, leading to potentially lower profits for the incumbents.