Economists and Policy Makers Questioned the Effectiveness of Discretionary Fiscal

question 43

Multiple Choice

Economists and policy makers questioned the effectiveness of discretionary fiscal policy during the 1970s for all the following reasons except

• A)the difficulty of estimating the natural rate of unemployment
• B)the time lags involved in implementing fiscal policy
• C)the existence of possible feedback effects of fiscal policy on aggregate supply
• D)the distinction between current and permanent income
• E)the problems of inflation and unemployment were basically solved

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Definitions:

CEO

Chief Executive Officer, the highest-ranking person in a company or organization, responsible for overall management.

Sales Budget

One of the major elements of the income statement budget that indicates the quantity of estimated sales and the expected unit selling price.

Production Budget

A budget of estimated units to be manufactured to meet budgeted sales and desired inventory levels.

Capital Expenditures Budget

A plan for a company’s spending on fixed assets, such as equipment or property, that will be used over a long period.