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:

Marginal Product

The extra output produced by using an additional unit of a particular production factor, while holding other factors steady.

Candy Bars

Confectionery items that consist of chocolate and other sweet ingredients, often with a filling or coating.

VMPL

The value of the marginal product of labor, which denotes the additional value generated by employing one more worker.

Labor

The human effort, whether physical or mental, used in the production of goods and services.