An Effective Policy of Governmental Intervention in the Economy Requires

question 153

Multiple Choice

An effective policy of governmental intervention in the economy requires all of the following except one.Which is the exception?

• A)the will to reject sound policy if it gets in the way of political considerations
• B)the ability to estimate the economy's potential level of output
• C)the ability to predict what would happen without intervention
• D)an assortment of effective tools of discretionary policy
• E)the ability to achieve effective cooperation between fiscal and monetary policy makers

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Definitions:

Noncontrollable Costs

Costs incurred indirectly and allocated to a responsibility center that are not controllable at that level.

ROI

Return on Investment; a performance measure used to evaluate the efficiency or profitability of an investment relative to its cost.

Operating Assets

Assets that are used for the day-to-day functioning of a business and can include cash, inventory, and buildings.

Direct Fixed Costs

Costs that are constant for a certain level of production or period but are directly tied to the production process.