The Optimal Time for the Implementation of Restrictive Fiscal Policy

question 32

Multiple Choice

The optimal time for the implementation of restrictive fiscal policy would be

• A) before inflation accelerated.
• B) after inflation accelerated.
• C) during a recession.
• D) after the price level had risen significantly.

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Definitions:

Dividend

A portion of a company's earnings that is distributed to shareholders, usually in the form of cash or additional shares.

Effective Annual Rate

The actual interest rate an investor receives or pays in a year, taking into account the effect of compounding.

Quarterly Return

The financial return or profit generated by an investment over a three-month period.

Investment

Commitment of current resources in the expectation of deriving greater resources in the future.