Which of the Following Best Describes the Philosophy of Functional

question 24

Multiple Choice

Which of the following best describes the philosophy of functional finance?

• A)The federal budget should be balanced each year.
• B)A federal budget deficit should be permitted only during a business expansion.
• C)A federal budget deficit should be permitted only during a recession.
• D)Policy makers should focus on keeping the unemployment rate at the natural rate,even if this means budget deficits.
• E)Policy makers should be less concerned about budget deficits and more concerned with increasing the natural rate of unemployment.

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Definitions:

Demand Curve

A graph showing the relationship between the price of a good or service and the quantity demanded.

Complements

Complements are goods or services that are used together, where the use or consumption of one increases the demand for the other, such as coffee and sugar.

Substitutes

Products or services that can replace each other in use, where an increase in the price of one leads to an increase in demand for the other.

Substitutes

Goods or services that can replace each other in use, where an increase in the price of one leads to an increased demand for the other.