A Key Difference Between Functional Finance and Sound Finance Is

question 117

Multiple Choice

A key difference between functional finance and sound finance is that in the functional finance approach, the government has the potential for:

• A)a more active role in spending and taxing decisions.
• B)a less active role in spending and taxing decisions.
• C)no role since functional finance holds that on moral principle the budget should be balanced.
• D)more active role in spending and taxing but only during depressions.

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Definitions:

Expected Income

The income an individual anticipates to earn in the future based on current circumstances, potential investments, and employment prospects.

Utility Maximizer

An economic agent who seeks to achieve the highest level of satisfaction or utility from their choices, given their constraints.

Probability

A rating of the potential occurrence of an event, depicted on a scale from 0 to 1.

Expected Income

The income an individual or business anticipates to receive over a certain period.