When the Self-Correcting Mechanism of the ADI-IA Model Is Particularly

question 21

Multiple Choice

When the self-correcting mechanism of the ADI-IA model is particularly slow,the case for active fiscal policy is considerably strengthened when

• A) the overnight target rate is at its effective upper bound.
• B) the overnight target rate is at its effective lower bound.
• C) government deficits are roughly equal to 50 percent of real GDP.
• D) government spending exceeds government revenues.
• E) recessionary or inflationary gaps are relatively small.

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Definitions:

Shareholders

Individuals or entities that own shares in a corporation, giving them ownership interests in the company.

Declaration Date

The specific date on which a company announces its intention to pay a dividend or distribution.

Date of Record

The specific date on which a company determines its shareholders' eligibility to receive dividends or other distributions.

Payment Date

The specified date on which a dividend or a bond interest payment is to be made to investors.