Which of the Following Is Most Representative of the Functional

question 68

Multiple Choice

Which of the following is most representative of the functional finance view of the macroeconomy?

• A)The economy is self-regulating and the best thing the government can do to enhance stability is to stay out of the way.
• B)Budgets should be balanced. Doing otherwise is morally wrong.
• C)The government should decide on tax and spending plans based on their effects on the economy.
• D)Crowding out almost completely cancels out any deficit spending, so fiscal policy is likely to be ineffective.

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Definitions:

Balance

The amount of money held in a financial account, calculated as the funds deposited minus any withdrawals or expenditures.

Compounded Monthly

A method where interest is calculated and added to the principal sum every month, leading to interest on interest.

RRSP

For Canadians, both working and self-employed, the Registered Retirement Savings Plan offers a platform for saving and investing towards retirement.

Compounded Quarterly

The process of adding interest to the principal sum of a deposit or loan, where the interest amount is calculated and added four times a year.