Question

Match each situation with the method of government intervention used to rectify it.

1:People have too much money, and there is a danger of inflation.
2:The GDP has fallen to an all-time low, and there is low demand for most goods.
3:Few farmers produce cotton because profits are at the equilibrium price.
4:Prices of staple foods have shot up because of shortages after an earthquake.

A:price floor
B:contractionary fiscal policy
C:price ceiling
D:expansionary fiscal policy

Answer 1

People have too much money, and there is a danger of inflation. CONTRACTION FISCAL POLICY

The GDP has fallen to an all-time low, and there is low demand for most goods. EXPANSIONARY FISCAL POLICY

Few farmers produce cotton because profits are at the equilibrium price. PRICE FLOOR

Prices of staple foods have shot up because of shortages after an earthquake. PRICE CEILING

Answer 2

1:People have too much money, and there is a danger of inflation. - B contractionary fiscal policy

2:The GDP has fallen to an all-time low, and there is low demand for most goods. - D:expansionary fiscal policy

3:Few farmers produce cotton because profits are at the equilibrium price. - A:price floor

4:Prices of staple foods have shot up because of shortages after an earthquake. - C:price ceiling