Which of the Following Is an Appropriate Fiscal Policy Prescription

question 81

Multiple Choice

Which of the following is an appropriate fiscal policy prescription for the government to follow?

• A)Deficit reduction during a recession.
• B)Deficit reduction when there is excess AD.
• C)Deficit expansion in an inflationary gap.
• D)Deficit reduction during a war.

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Definitions:

Bank Guarantees

Bank guarantees are assurances provided by a bank on behalf of a client to guarantee the fulfillment of financial obligations to third parties.

Commercial Draft

A written order from one party to another, directing the payment of a specified sum of money to a third party, often used in trade.

Banker's Acceptance

A short-term debt instrument issued by a company but guaranteed by a bank, commonly used in international trade.

Trade Acceptance

A written promise or a draft by one party, the seller, to another, the buyer, to pay a specified sum of money at a future date.