Practice Questions
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Which of the following best describes a supply-side economic policy aimed at controlling inflation?
Reducing rules and regulations helps businesses produce more goods. Other options are incorrect because Some might think that taxing companies lessens...
How can supply-side economics contribute to inflation control in a fiscal policy framework?
Reducing taxes helps businesses keep more money. Other options are incorrect because Some might think that more government spending boosts demand; Peo...
How can a government effectively use fiscal policy to manage inflation while also addressing high unemployment rates?
Decreasing taxes and increasing government spending puts more money in people's hands. Other options are incorrect because Some might think that raisi...
How can a government effectively reduce inflation while managing budget deficits, and what impact does this have on GDP?
Reducing government spending and increasing taxes can help control inflation. Other options are incorrect because Some might think that spending more ...
How does government spending influence inflation control when combined with demand management strategies and monetary policy adjustments?
When the government spends money, it can boost demand for goods and services. Other options are incorrect because This idea suggests that spending alw...
Which of the following is a goal of fiscal policy aimed at controlling inflation?
Fiscal policy aims to control inflation by reducing spending and increasing taxes. Other options are incorrect because Some might think cutting spendi...
Which of the following fiscal policy measures is most effective for controlling inflation?
Reducing government spending helps lower the amount of money in the economy. Other options are incorrect because Some might think that spending more w...
How does increased government spending influence inflation control in an economy?
When the government spends more money, it puts more cash into the economy. Other options are incorrect because Some might think that spending less can...
When the government decreases spending to combat inflation, this action is expected to lead to a movement along the short-run ______ curve, illustrating the trade-off between inflation and unemployment.
The Phillips curve shows the relationship between inflation and unemployment. Other options are incorrect because Some might think Keynesian economics...
How does a government decrease inflation through fiscal policy without increasing unemployment?
Cutting government spending lowers the total money in the economy. Other options are incorrect because Some think raising taxes helps control inflatio...
Fiscal policy is to inflation control as monetary policy is to what?
Monetary policy helps control inflation by adjusting interest rates. Other options are incorrect because Some might think monetary policy is about spe...
If the government decreases its spending significantly, which of the following is the most likely effect on inflation in the short run?
When the government spends less money, people and businesses have less money to spend. Other options are incorrect because Some might think that savin...
A government faces rising inflation and decides to decrease its spending significantly. As a result, the economy experiences a reduction in aggregate demand. How is this action expected to influence the short-run Phillips curve, and what might be the implications for unemployment in the short term?
When the government spends less, people buy less. Other options are incorrect because This answer suggests that spending more would lower unemployment...
Arrange the following steps in the correct order to illustrate the impact of fiscal policy on inflation control: A) Government decreases spending, B) Aggregate demand decreases, C) Inflationary pressures reduce, D) Short-run Phillips curve shifts left.
When the government decreases spending, people have less money to spend. Other options are incorrect because This option suggests that inflation can r...
A government decides to reduce its spending to control inflation. Which of the following categories best explains the expected outcome of this action in relation to the short-run Phillips curve?
When the government spends less, it can help lower inflation. Other options are incorrect because This option suggests that spending less would cause ...
Which of the following actions can help reduce inflation in an economy according to fiscal policy principles? Select all that apply.
None of the options listed are correct for reducing inflation through fiscal policy. Other options are incorrect because Cutting government spending m...
How does a decrease in government spending affect inflation according to the short-run Phillips curve?
When the government spends less, it can lower inflation. Other options are incorrect because This answer suggests that less spending lowers unemployme...
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