If a Contraction in Aggregate Demand Causes a Recession, the Great

question 11

Multiple Choice

If a contraction in aggregate demand causes a recession, the Great Moderation consensus on macroeconomics suggests that:

• A) fiscal discipline with a balanced budget eventually stimulates aggregate demand.
• B) fiscal policy should take the leading role in economic stabilization.
• C) the use of discretionary fiscal policy is counterproductive except in special circumstances.
• D) monetary discipline with a reduction in the money supply eventually stimulates aggregate demand.

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Definitions:

Excise Tax

A type of tax levied on specific goods, services, or activities, often aimed at discouraging undesirable behaviors or generating revenue.

Latte

A coffee drink made with espresso and steamed milk, often with a small amount of foam on top.

Excise Tax

A type of tax charged on specific goods, such as alcohol and tobacco, often used to discourage their use and generate revenue.

Tax Burden

The measurement of taxes paid by an individual or business, often expressed as a percentage of income or revenue.