Fiscal Policy Designed to Increase Aggregate Demand During Economic Downturns

question 100

Multiple Choice

Fiscal policy designed to increase aggregate demand during economic downturns and decrease aggregate demand during economic booms is called

• A) business cycle fiscal policy.
• B) new classical fiscal policy.
• C) supply-side fiscal policy.
• D) countercyclical fiscal policy.

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Definitions:

Preferences

Preferences refer to an individual's subjective tastes or desires, ranking goods or outcomes in order of choice or desirability in decision making or consumption.

Utility Function

Describes how different combinations of goods or outcomes are valued by an individual, helping to predict choice under uncertainty.

Income

The financial gain or revenue received by an individual or entity, typically through wages, investments, or business operations.

Prices

The amount of money expected, required, or given in exchange for goods or services.