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

question 10

Multiple Choice

Arguments in favor 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) the Great Depression could have been avoided if the Federal Reserve had pursued a policy of steady money growth.
C) fluctuations in real GDP have been less severe following World War II than prior to World War I.

• A)failing to use monetary and fiscal policy leads to inefficient fluctuations in output and employment.
• B)the Great Depression could have been avoided if the Federal Reserve had pursued a policy of steady money growth.
• C)fluctuations in real GDP have been less severe following World War II than prior to World War I.
• A)failure of policymakers to respond to large contractionary shocks to private spending caused the Great Depression.

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Definitions:

Future Growth Opportunities

Potential avenues or prospects that can lead to an expansion of a business's operations and an increase in its profitability.

Cost of Equity Capital

The return that investors require for an investment in a company's equity, reflecting the compensation for taking on equity risk.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment’s cost.

Earnings Multiple

A financial metric used to evaluate the relative value of a company, determined by dividing the company's stock price by its earnings per share.