According to Monetarists,an Expansionary Fiscal Policy

question 95

Multiple Choice

According to monetarists,an expansionary fiscal policy:

• A) will be ineffective because the interest rate will rise and crowd out private investment spending.
• B) should not be permitted so long as a public debt exists.
• C) should be used only when unemployment exceeds 6 percent of the labor force.
• D) will be effective,provided the money supply is held constant.

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Definitions:

Weighted Average

A calculation that takes into account both the quantity and the significance of each item in a set to find an average that is influenced by the size or weight of each component.

Preferred Shares

A class of ownership in a corporation that has a higher claim on its assets and earnings than common shares, often with fixed dividends and no voting rights.

Basic Earnings

Basic earnings typically refers to the net income of a company, calculated before any effects of preferred dividends, divided by the weighted average number of common shares outstanding.

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue, indicating the company's financial performance over a period.