All of the Following Make the Use of Fiscal Policy

question 43

Multiple Choice

All of the following make the use of fiscal policy less attractive except

• A)that it cannot be effective unless it is accommodated with expansionary monetary policy.
• B)the substantial margin of error in the value of the multiplier.
• C)the legislative lag, which is the time it takes for Congress and the President to pass and implement the measure.
• D)the crowding out effect, which is the decrease in private spending that occurs due to increased government spending.

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Definitions:

Maturity

The date on which a financial instrument, such as a bond or loan, reaches its due date and the principal amount must be repaid.

Zero-Coupon Bonds

Debt securities that don't pay periodic interest but are issued at a significant discount to par value, providing profit at maturity when they reach their face value.

Coupon Rate

The annual interest rate paid by a bond's issuer to its holders, expressed as a percentage of the bond's face value.

Par Value

The face value of a bond or the stock value stated in the corporate charter, representing the minimum standard value.