Which of the Following Is Not a Weakness of Fiscal

question 26

Multiple Choice

Which of the following is not a weakness of fiscal policy as a tool of economic stabilization?

• A)It is ineffective in dealing with stagflation.
• B)Its correct implementation depends on an accurate estimate of potential output.
• C)It is subject to lags.
• D)It affects only aggregate demand but does not have any impact on aggregate supply.
• E)Households may not respond to changes they perceive as permanent.

Calculate APS, APC, MPS, and MPC from given data.

Critically evaluate statements about consumption, saving, and their interrelations.

Understand the concepts related to the issuance and redemption of bonds before maturity.

Calculate principal balances and installment payments for mortgage notes.

---

Definitions:

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the total quantity of output produced.

Average Variable Cost

The total variable costs divided by the quantity of output, representing the variable cost per unit of output.

Marginal Cost

The escalation in total financial outlay due to the creation of one more unit of a product or service.

Average Total Cost

Calculated by dividing the total cost to produce a product by the quantity of the product produced, it represents the per-unit cost of production.