Which One of the Following Is an Area of Agreement

question 31

Multiple Choice

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

• A) Congressional action is necessary if automatic stabilizers are going to be an effective stabilization tool.
• B) It is difficult to time changes in discretionary fiscal policy in a manner that will promote stability.
• C) Fiscal policy is more 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:

Monetary Policy

The process by which a central monetary authority, like a central bank, controls the supply of money in an economy, primarily to influence inflation and economic growth.

Fiscal Policy

The application of tax policies and government expenditure to affect economic conditions.

Agriculture Adjustment Act

A United States federal law of the New Deal era designed to boost agricultural prices by reducing surpluses.

Agriculture Products

Goods produced through the cultivation of plants and the raising of animals to provide food, fiber, and other products.