Which of the Following Is Most Representative of the Functional

question 68

Multiple Choice

Which of the following is most representative of the functional finance view of the macroeconomy?

• A)The economy is self-regulating and the best thing the government can do to enhance stability is to stay out of the way.
• B)Budgets should be balanced. Doing otherwise is morally wrong.
• C)The government should decide on tax and spending plans based on their effects on the economy.
• D)Crowding out almost completely cancels out any deficit spending, so fiscal policy is likely to be ineffective.

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Definitions:

Total Debt

The sum of all owed liabilities, both current and long-term, that a company must eventually pay back.

Cash Coverage Ratio

A financial metric that measures a company's ability to cover its debt obligations with its available cash and cash equivalents.

Times Interest Earned

A financial ratio that measures a company's ability to meet its debt obligations by comparing net income before interest and taxes to its interest expenses.

Depreciation Expense

The allocation of an asset's cost over its useful life, reflecting the decrease in value over time due to wear and tear or obsolescence.