Fiscal Policy

question 77

Multiple Choice

Fiscal policy:

• A)uses the federal government's powers of spending and taxation to affect employment,the price level,and GDP.
• B)uses the federal government's control over the money supply and interest rates to affect employment,the price level,and GDP.
• C)can affect employment and prices,but not the level of GDP.
• D)can affect employment and the level of GDP,but not the price level.
• E)is most effective when employed by state governments rather than by the federal government.

---

Definitions:

Characteristic Line

In finance, it's a line generated in a scatterplot by regressing the returns of a security against the returns of the market, used to assess the security's sensitivity to market movements.

T-Bills

Short-term debt securities issued by the U.S. Treasury to finance government spending, seen as low-risk investments.

Market Portfolio

A theoretical bundle of investments that contains all available assets in the market, representing the entire investment universe at a given time, used in financial theory to model returns.

Jensen's Measure

A performance evaluation tool that measures the excess return a fund generates over its expected return, given its risk level.