Which of the Following Factors Substantially Reduces the Effectiveness of Discretionary

question 100

Multiple Choice

Which of the following factors substantially reduces the effectiveness of discretionary changes in tax rates or government expenditures as a stabilization tool?

• A) Even though computer models have enhanced our forecasting ability, policy makers at the Federal Reserve have been reluctant to utilize information supplied by the models.
• B) When fiscal policy is altered, the Fed generally shifts monetary policy in a manner that offsets the impact of the fiscal action.
• C) Changes in government expenditures and taxes are always offset by equal changes in private spending.
• D) Since it takes time for fiscal policy to work and since the future is difficult to forecast, it is difficult to time fiscal policy changes correctly.

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Definitions:

Quasi War

An undeclared naval conflict between the United States and France from 1798 to 1800, arising from disputes over treaties and naval harassment.

Undeclared

Refers to a situation or status not officially announced or confirmed, often used in the context of wars, intentions, or academic majors.

Franchise

Franchise, in the context of politics, refers to the right to vote in public elections, an essential element of democratic governance and citizen participation.

Manhood

Manhood refers to the state or condition of being a man, often associated with attributes such as strength, maturity, and responsibility, as defined by societal standards.