Which One of the Following Reduces the Likelihood That Real-World

question 99

Multiple Choice

Which one of the following reduces the likelihood that real-world fiscal policy will promote economic stability?

• A) Policy planners do not know whether a tax cut is expansionary or restrictive.
• B) Policy makers need to know what economic conditions will be like 6 to 18 months into the future, and this is extremely difficult to forecast accurately.
• C) Policy planners are reluctant to implement expansionary fiscal policy even during a serious recession.
• D) Public choice theory suggests that elected political officials will generally favor restrictive fiscal policy.

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Definitions:

Economic Growth

The increase in the production of goods and services in an economy over a period of time.

Microeconomics

Microeconomics is the branch of economics that focuses on the actions of individuals and industries, like the dynamics between buyers and sellers, borrowers and lenders.

Rate Of Inflation

The pace at which the general level of prices for goods and services is rising, eroding purchasing power.

Macroeconomics

The branch of economics that studies overall economic factors, such as national productivity, total national income, and the overall levels of prices and employment.