Which of the Following Is NOT a Valid Criticism of Discretionary

question 66

Multiple Choice

Which of the following is NOT a valid criticism of discretionary fiscal policy?  

• A) Implementation of fiscal policy is sometimes difficult. 
• B) Time lags in fiscal policy are long. 
• C) Fiscal policy works only during periods of stagflation. 
• D) Fiscal policy often affects only current income, but many economic decisions are made on the basis of permanent income.

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Definitions:

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the degree to which a company can increase its profits by increasing sales.

Profits

The financial gains that remain after subtracting all expenses from revenue, indicating the financial success of a business.

Operating Leverage

A measure of how sensitive a company's operating income is to a change in its sales volume, indicating the degree to which fixed costs are used in production.

Profits

The financial gain obtained when revenues generated from business activities exceed the expenses, costs, and taxes needed to sustain them.