As Uncertainty About the Effects of Policy on Output Decreases

question 43

Multiple Choice

As uncertainty about the effects of policy on output decreases, we would expect that:

• A) policy makers would more frequently implement fine tuning policies.
• B) policy makers would implement more active policies.
• C) policy makers would implement less active policies.
• D) Both A and B.
• E) Both A and C.

---

Definitions:

Favorable Variances

Differences between actual and budgeted financial performance that result in a better-than-expected financial position.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, providing a more useful tool for performance evaluation.

Variable Costs

Costs that vary directly with the level of production or business activity. Examples include raw materials, packaging, and direct labor.

Fixed Costs

Fixed Costs are business expenses that remain constant regardless of the volume of goods or services produced, such as rent, salaries, and loan payments.