A Reason Why Discretionary Fiscal Policy Might Move the Economy

question 120

Multiple Choice

A reason why discretionary fiscal policy might move the economy away from potential GDP
Instead of toward potential GDP is that

• A)government programs are always expansionary.
• B)economic forecasts consistently underestimate the impact of fiscal policy.
• C)government programs automatically move real GDP away from potential GDP.
• D)it is difficult to know whether real GDP is above or below potential GDP.
• E)during a recession, politicians prefer increases in government spending over decreasing taxes.

---

Definitions:

Legal Title

The recognized legal ownership of property or assets, which includes the rights to use, sell, or transfer the property.

FOB Destination

A shipping term where the seller retains the risk of loss until the goods reach the buyer's location and are ready for unloading.

Inventory Cost Flow

The method used to determine the cost of inventory sold and remaining in stock.

Ending Inventory

Ending inventory refers to the total value of goods available for sale at the end of an accounting period, crucial for calculating cost of goods sold and gross profit.