A Major Complication with Fiscal Policy to Control Aggregate Demand

question 43

Multiple Choice

A major complication with fiscal policy to control aggregate demand is the

• A)inability to agree on macroeconomic goals.
• B)accuracy of modern forecasting models.
• C)inability to change aggregate demand with fiscal tools.
• D)constantly changing investment and net exports because of other events.

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Definitions:

Month

A unit of time, roughly based on the period of the Moon's orbit around Earth, traditionally used to measure durations of approximately 30 days.

Break Even

The point at which total costs and total revenue are equal, resulting in no net loss or gain.

Variable Cost

Costs that vary directly with the level of production or sales volume, such as materials and labor.

Fixed Costs

Costs that do not change with the amount of goods or services produced, such as rent, salaries, and insurance.