Which One of the Following Is an Area of Continued

question 88

Multiple Choice

Which one of the following is an area of continued disagreement among modern macroeconomists with regard to the use of fiscal policy?

• A) Automatic stabilizers help reduce the fluctuations in aggregate demand and output.
• B) It is difficult to time changes in discretionary fiscal policy in a manner that will promote stability.
• C) Fiscal policy is much less potent than the early Keynesian view implied.
• D) Budget deficits are a highly effective tool with which to combat a severe recession.

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Definitions:

Risk Characteristics

The identifiable attributes of a security, financial instrument, or investment that determine its risk profile, such as volatility, liquidity, and credit risk.

Divisions

Separate parts or branches of a company that operates under the greater corporate umbrella, each might focus on a specific product line or market segment.

Empirical Approach

A method of acquiring knowledge based on observation or experience rather than theory or pure logic.

After-Tax Cost of Capital

The net cost of capital to a firm after accounting for the tax benefits received on debt interest, reflecting the true cost of acquiring funding after taxes.