In general, price matching a DG ad would depend on whether or not you have one in your local area. There are no Dollar General's in my entire state, but they still come in trying to price match diapers from their phone. Price match policy says that the guest needs to bring in a local printed ad (not a photo or mobile version of an ad) to do a price match. So for my store it is easy to decline because it is not a local competitor's ad, it is not a printed ad, and it in the case of the diapers, it does not advertise a specific item.
In my opinion, you should not say to the guest that we do not price match Dollar General ad. Because you can, if it fits with the rest of the price match policy. Instead, for the diapers, explain that the DG ad does not advertise a specific product and that we can only match it if it does so.