Which of the Following Attributes of Fiscal Policy Will Most

question 136

Multiple Choice

Which of the following attributes of fiscal policy will most likely be stressed by a proponent of supply-side economics?

• A) the impact of budget deficits on interest rates and aggregate demand
• B) the impact of government spending on aggregate demand, output, and employment
• C) the impact of marginal tax rates on the supply and productivity of resources
• D) the impact of budget deficits on the rate of taxation in the future

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Definitions:

Present Value

The actual value now of future money amounts or cash inflows based on a defined rate of yield.

Earnings Rate

The rate at which a company or investment generates income, usually expressed as a percentage of the investment or the company's capital.

Compound Interest

Interest on a deposit or loan that is calculated based on the initial amount along with the total of all interest accumulated in earlier periods.

Present Value Index

A financial calculation that allows the comparison of the present value of cash inflows to the present value of cash outflows.