In the Rational Expectations View, the Best Approach to Fiscal

question 81

Multiple Choice

In the rational expectations view, the best approach to fiscal policy is for the government to:

• A) Cut taxes
• B) Balance its budget
• C) Eliminate transfer payments
• D) Fix government spending

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Definitions:

Money Market Account

A type of savings account that typically offers higher interest rates, with some restrictions on withdrawal.

Cash Surplus

The amount of cash that exceeds the cash needs of a company, indicating a positive financial state with excess liquidity.

Major Expenditure

A significant financial outlay, often relating to the purchase of fixed assets, long-term investments, or other large-scale business expenses.

Lockbox Arrangement

A service provided by banks to process payments quickly by having checks sent to a special post office box.