The Redirection of Macroeconomic Policy That Took Place During the Reagan

question 52

Multiple Choice

The redirection of macroeconomic policy that took place during the Reagan and both Bush administrations was inspired by

• A)supply-side economics.
• B)real business cycle theory.
• C)new classical economics.
• D)new Keynesian directions.

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Definitions:

Financial Distress Costs

Expenses stemming from a company's financial troubles, including the costs of bankruptcy, restructuring, and impaired ability to conduct business.

Indirect Bankruptcy Costs

Indirect bankruptcy costs include the intangible costs related to the loss of business, customer trust, and employee morale that a company faces when going through bankruptcy.

M&M Proposition II

It refers to a theory related to capital structure, stating that a firm's cost of equity increases with leverage because the risk to equity holders increases.

Business Risk

The exposure a company or investor has to various factors that can lower its profits or lead to a loss.