Countercyclical Fiscal Policy Is Risky Because

question 133

Multiple Choice

Countercyclical fiscal policy is risky because

• A)it tends to increase the national debt.
• B)real GDP is likely to be close to potential GDP by the time the policy takes effect.
• C)it tends to have no effect on unemployment.
• D)it tends to make recessions more severe.
• E)it tends to result in higher inflation.

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Definitions:

Income Statement

A financial report detailing a company's incomes, costs, and net earnings during a defined timeframe.

Contribution Margin

The amount by which a product's selling price exceeds its total variable costs, contributing towards covering fixed expenses and generating profit.

Unit

A single, distinct item or entity that is a part of a larger group, system, or measure.

Break-Even Point

The point where the amount of goods produced or sold matches the total costs, leading to neither profit nor loss.