Discretionary Fiscal Policy

question 198

Multiple Choice

Discretionary fiscal policy:

• A) is not subject to lags and therefore is effective at controlling business cycles.
• B) refers to changes in the money supply used to smooth out the economy's ups and downs.
• C) is favored by monetarists.
• D) is favored by Keynesians.
• Answer Key

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Definitions:

Market Index

A method or metric to measure the performance of a group of stocks, representing a particular market or sector, to give investors a snapshot of its overall health.

Active Portfolio

An investment strategy where the portfolio manager makes specific investments with the goal of outperforming an investment benchmark index.

Nonsystematic Variance

The portion of a security's variance that is unique to the specific security and can be mitigated through diversification.

Market Index

An aggregate value produced by combining several stocks or other investment vehicles together and expressing their total values against a base value from a specific date.