The Purpose of Functional Finance Is to

question 23

Multiple Choice

The purpose of functional finance is to

• A) decrease deficits through monetary policy.
• B) use fiscal policy to keep aggregate demand at the desired level,regardless of the impact on deficits.
• C) tax corporate income first at the corporate level,and then again when it is distributed to shareholders.
• D) use monetary policy to keep deficits stable over time.

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Definitions:

Investment

The allocation of resources, usually money, into assets or projects expected to yield future returns.

Interest Rate

The cost of borrowing money, typically expressed as a percentage of the amount lent, which lenders charge borrowers or pay to savers.

Wine Drinkers

Individuals who consume wine, a beverage made by fermenting grapes or other fruits.

Rational Investor

An investor who makes decisions based on the expected outcomes, utilizing all available information to maximize the utility of wealth.