An Economist Who Follows a Functional Finance Principle Believes That

question 5

Multiple Choice

An economist who follows a functional finance principle believes that the government should:

• A)do nothing in response to a recession.
• B)do nothing in response to a recession due to the Ricardian equivalence theorem.
• C)run either a deficit or surplus depending on the state of the economy.
• D)run a balanced budget.

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Definitions:

Small Business

An independently owned and operated company that is limited in size and revenue depending on the industry.

Service Providers

Entities that offer an array of services across various sectors, including telecommunications, health, or financial services, to satisfy customer needs.

Retailers

Intermediaries who buy products from manufacturers (or other intermediaries) and sell them to consumers for home and household use rather than for resale or for use in producing other products.