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:

Net Operating Income

The profit generated from a company's regular business operations, excluding expenses like taxes and interest.

Divisional Segment Margin

A measure of the profitability of a particular division or segment within a company, calculated as the segment's revenue minus its direct costs.

Common Fixed Expense

Rephrased: Fixed costs that are not directly tied to the level of production or sales and are common across different departments or product lines.

Operating Results

The financial outcomes of a company's operations, often presented as net income or loss, which represent the profitability from regular business activities.