If the primary goal is to reduce inflation, which of the following fiscal policy actions would be appropriate during a period of a rapidly increasing consumer price index?
I. Reduce government expenditures for defense and space research.
II. Increase transfer payments to those most severely affected by the rising price index.
III. Increase personal income tax rates.
(A) I only
(B) II only
(C) III only
(D) I and III only
(E) II and III only
Answer: D
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