📚 Learning Guide
Fiscal Policy and Inflation Control
easy

Which of the following best describes a supply-side economic policy aimed at controlling inflation?

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Choose the Best Answer

A

Increasing taxation on corporations to reduce spending

B

Reducing regulatory burdens to stimulate production

C

Implementing subsidies for essential goods

D

Increasing government spending on public services

Understanding the Answer

Let's break down why this is correct

Answer

A supply-side economic policy aimed at controlling inflation focuses on increasing the production of goods and services to meet demand. When businesses can produce more efficiently, prices tend to stabilize or even decrease because there is enough supply for consumers. For example, if the government invests in infrastructure, it can help companies transport their products more easily, leading to lower costs and prices. This approach encourages growth by creating jobs and increasing overall economic activity, which can help keep inflation in check. By boosting supply, the policy aims to ensure that prices do not rise too quickly, benefiting consumers and the economy.

Detailed Explanation

Reducing rules and regulations helps businesses produce more goods. Other options are incorrect because Some might think that taxing companies lessens their spending; It may seem that giving money for essential goods helps people.

Key Concepts

Supply-side economics
Topic

Fiscal Policy and Inflation Control

Difficulty

easy level question

Cognitive Level

understand

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