What Has Been the Practical Effect on Macroeconomic Policy of the Huge

question 42

Multiple Choice

What has been the practical effect on macroeconomic policy of the huge U.S.federal budget deficits of the 1980s?

• A)The automatic stabilizers no longer functioned.
• B)It was tough gaining support to cut taxes or raise government purchases of goods and services during cyclical downturns.
• C)Monetary policy has become less useful than fiscal policy because the deficits are so large that they have a greater impact than the money supply.
• D)There has been more emphasis on fine-tuning the economy than there was previously.
• E)There is now a consensus among economists that a balanced budget amendment should be adopted.

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Definitions:

Work Sheet

An internal document used by accountants to organize and adjust financial information before generating official financial statements.

Net Income

The profit amount left for a company following the subtraction of all expenditures and tax payments from its gross revenue.

Income Statement Credit Column

A section on the income statement where credits or revenues are recorded.

Balance Sheet

A document that captures the financial standing of a company at a certain date, outlining its assets, debts, and the equity held by shareholders.