Mistimed Contractionary Fiscal Policy Can Cause

question 209

Multiple Choice

Mistimed contractionary fiscal policy can cause:

• A) a real shock.
• B) rising interest rates.
• C) a recession.
• D) inflation.

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Definitions:

Idle Capacity

The unused portion of a company’s productive capacity, such as machinery or labor, that could be used for production but currently isn't.

Special Project

A temporary endeavor with a specific goal and timeline, which may require resources outside of the company's normal work scope.

Relevant Cost

Expenses that are directly tied to a specific business decision, which may affect the outcome of that decision.

Discounted Price

The reduced price of an item after applying a discount, which lowers the selling price from its original level.