The General Formula for Calculating the Desired Fiscal Stimulus Is

question 19

Multiple Choice

The general formula for calculating the desired fiscal stimulus is

• A)AD shortfall × the multiplier.
• B)1/(AD shortfall × the multiplier).
• C)AD shortfall ÷ the multiplier.
• D)1/(AD shortfall ÷ the multiplier).

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Definitions:

Par Value

The face value of a bond or stock as stated by the issuing company, unrelated to market value.

Premium

An amount paid in excess of the nominal or face value, often in relation to insurance or bonds.

Tax Deductible

Expenses or payments that can be subtracted from gross income to reduce the amount of income subject to taxation.

Term Bonds

Bonds that have a fixed maturity date on which the principal amount is due to be paid back to investors in full.