When Political Economists Talk About Fiscal Policy, What Are They

question 20

Multiple Choice

When political economists talk about fiscal policy, what are they referring to?

• A) The use of taxing and spending decisions to reach government goals.
• B) The set of government policies related to the raising of revenues through taxation.
• C) The set of policies accomplished through government spending.
• D) The manipulation of interest rates and the money supply to reach government goals.
• E) All of these.
• F) Only answers (A), (B), and (C) refer to fiscal policy.

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Definitions:

Price Inelastic

Describes a situation where the quantity demanded or supplied of a good or service changes little when its price changes.

Short Run

A time period in economics during which at least one input or factor of production is fixed and cannot be changed, limiting the immediate response to changes in demand or technology.

Long Run

A period in economics sufficient for all factors of production and costs to be variable, allowing firms to adjust to market conditions fully.

Bumper Crops

An exceptionally large crop yield, often much higher than average.