Fiscal Policy Is More Effective in Affecting Economic Activity If

question 36

Multiple Choice

Fiscal policy is more effective in affecting economic activity if

• A) many resources are unemployed.
• B) there is a real shock instead of an aggregate demand shock.
• C) the economy returns to the long-run condition almost immediately.
• D) there is a long implementation lag.

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Definitions:

Convert

To change something into a different form or properties, often used in financial contexts such as converting currencies or securities.

Gain

An increase in the value of an asset or a decrease in the value of a liability which contributes to an increase in the owner's equity.

Loss

The financial state where expenses exceed revenues within a specific period.

Guaranteed Allowance

An allowance for doubtful accounts that a company anticipates as an expense, guaranteeing a certain value.