Which of the Following Statements Comparing Fiscal Policy with Monetary

question 36

Multiple Choice

Which of the following statements comparing fiscal policy with monetary policy as a means of attaining macroeconomic goals is the most accurate?

• A)The effects of monetary and fiscal policy are both immediate.
• B)The effects of monetary policy are certain and predictable, while the effects of fiscal policy are not.
• C)The implementation of monetary policy is not slowed down by the same budgetary process as fiscal policy.
• D)It takes a long time for fiscal policy to have an effect on the economy, but the effects of monetary policy are immediate.

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Definitions:

Geometric Average Return

A method to calculate the average rate of return per period on an investment, compounded over multiple periods.

Treynor Measure

A performance metric for determining how well the returns of an investment compensate the investor for taking a risk, adjusting for market volatility.

S&P 500 Index

A market-capitalization-weighted index of the 500 largest U.S. publicly traded companies and is considered one of the best representations of the U.S. stock market.

Sharpe Measure

A metric for calculating risk-adjusted return, measuring excess return per unit of deviation in an investment.