Answer: See explanation
Explanation:
1. People have too much money, and there is a danger of inflation. = Contractionary fiscal policy
This will be vital in the reduction of the money in circulation. An example is increasing tax rate.
2. The GDP has fallen to an all-time low, and there is low demand for most goods. = Expansionary fiscal policy
An expansionary fiscal policy will boost demand. An example is reduction in tax.
3. Few farmers produce cotton because profits are at the equilibrium price. = Price floor
A price floor will motivate the farmers as they can sell their product above the equilibrium price.
4. Prices of staple foods have shot up because of shortages after an earthquake. = Price ceiling
Price ceiling is the compulsory maximum amount that the sellers will be able to sell the good. This will make the goods affordable to the people.
