Which of the Following Statements Is True

question 119

Multiple Choice

Which of the following statements is true?

• A)In the short run, changes in fiscal policy mainly affect potential GDP.
• B)Fiscal policy's initial impact on real GDP is permanent.
• C)Fiscal policy does not have the potential to reduce the size of economic fluctuations.
• D)Erratic changes in fiscal policy can increase economic fluctuations.
• E)Fiscal policy cannot cause erratic fluctuations in real GDP.

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Definitions:

Internally-Oriented

A focus or emphasis on one's own thoughts, feelings, and internal psychological processes.

Externally-Oriented

A focus on the external aspects of life, including the environment, society, and interactions with others, rather than internal thoughts or feelings.

Internal Locus

Refers to believing that one has control over their life events and outcomes as opposed to external forces.

Real-Life Example

An actual, practical instance or occurrence that illustrates or clarifies a principle, concept, or phenomenon, grounding theoretical discussions in everyday experience.