The correct answer is: Launch all EC2 instances in the same Availability Zone within a Region and use a placement group with the 'cluster' placement strategy to ensure low latency and high bandwidth.

When deploying a latency-sensitive application that relies on an in-memory database and needs high network throughput, the most effective architecture is to co-locate EC2 instances in the same Availability Zone and group them into a cluster placement group. Cluster placement groups place instances close together within the same rack or closely connected racks, which minimizes network latency and maximizes throughput. It also avoids cross-AZ traffic, which incurs additional data transfer charges in AWS.

The option Set up an Auto Scaling group that launches EC2 instances in different Availability Zones using a step scaling policy to accommodate increased demand focuses on scalability but not network performance or data transfer efficiency. Inter-AZ traffic is more expensive and slower than intra-AZ traffic, which defeats the cost-efficiency and low-latency requirements.

The option Deploy all EC2 instances across multiple Availability Zones using a placement group with the 'partition' strategy for better fault isolation is better suited for large distributed systems like Hadoop, where fault isolation is more important than network throughput. It doesn't offer the close proximity placement that 'cluster' strategy does, and incurs inter-AZ transfer costs.

The option Use an Auto Scaling group that adds EC2 instances based on network I/O thresholds across multiple Availability Zones for better regional coverage again misses the point of minimizing latency and cost. Spanning AZs introduces delay and cost, and doesn't guarantee the tight network coupling that a cluster placement group provides.

This question is important because it tests your ability to optimize for performance and cost simultaneouslytwo critical pillars of AWS architecture. It also tests familiarity with EC2 placement strategies and the implications of network architecture on pricing and latency.

To answer these types of questions, look for clues in the scenario such as 'low latency,' 'high throughput,' and 'cost-effective.' These often point to placement groups with the cluster strategy, especially when in-memory or tightly coupled applications are mentioned. The trick is to avoid spreading workloads across AZs when tight network performance is needed, even if high availability is desirable in other contexts.

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