On the Basis of Both Theory and Empirical Evidence, Most

question 64

Multiple Choice

On the basis of both theory and empirical evidence, most economists believe that changes in fiscal policy have

• A)powerful effects on real GDP and factor prices both in the short run and in the long run.
• B)important short- run effects on real GDP and factor utilization but are less effective in changing potential GDP in the long run.
• C)no effect on factor utilization in the short run or on factor prices in the long run.
• D)long- run effects on potential GDP but have little impact on short- run real GDP.
• E)major effects on the incentive to save in the short run.

---

Definitions:

Cognitive Development

The process by which individuals acquire and understand knowledge through thought, experience, and the senses.

Freud's Developmental

Refers to Sigmund Freud's psychosexual stages of development, which are oral, anal, phallic, latency, and genital stages, each associated with specific conflicts and influences on personality.

Psychological Impact

The effect on an individual's mental health and emotional state due to various factors or experiences.

Erikson's Stages

A theory by Erik Erikson outlining eight stages of psychosocial development from infancy to adulthood, emphasizing crisis and resolution.