Having a Countercyclical Discretionary Fiscal Policy Would Involve

question 14

Multiple Choice

Having a countercyclical discretionary fiscal policy would involve:

• A) running budget deficits during an expansion and surpluses during a contraction.
• B) running budget deficits during a contraction and surpluses during an expansion.
• C) running balanced budgets at all times.
• D) running consistent budget deficits.

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Definitions:

Investment

The act of allocating resources, usually money, with the expectation of generating an income or profit.

Mutually Exclusive Projects

Investment opportunities where the acceptance of one project requires the rejection of another.

Cost of Capital

The desired return a corporation aims for in its investment activities to retain its market capitalization and lure in investments.

IRR

Internal Rate of Return; a financial metric used to evaluate the profitability of investments, indicating the annualized effective compounded return rate.