Arguments in Favour of Active Economic Policy Include All of the Following

question 28

Multiple Choice

Arguments in favour of active economic policy include all of the following except:

• A)failing to use monetary and fiscal policy leads to inefficient fluctuations in output and employment.
• B)policymakers can make precise forecasts about the economy and the effects of their policies.
• C)fluctuations in real GDP have been less severe following World War II than prior to World War I.
• D)failure of policymakers to respond to large contractionary shocks to private spending caused the Great Depression.

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Definitions:

Depreciation

Depreciation is the accounting process of allocating the cost of a tangible asset over its useful life, reflecting wear and tear, deterioration, or obsolescence.

Operating Costs

Operating Costs are expenses associated with the day-to-day functions of an organization, excluding direct material and labor costs.

Tax Rate

The rate at which a person or company is taxed by the state.

Profitability Index

A financial tool used to evaluate the desirability of an investment or project by dividing the present value of future cash flows by the initial investment.