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:

Opportunity Cost

Opportunity cost represents the value of the best alternative that must be forgone as a result of choosing another option.

Maximum Tax

An imposed upper limit on the amount of taxes that can be levied on an individual or entity by the government.

Buyers Pay

Refers to situations where the responsibility for covering the cost of a transaction, tax, or fee lies with the buyer rather than the seller.

Sellers Receive

The revenue or payment that sellers get in exchange for providing goods or services in the market.