The Aim of Countercyclical Fiscal Policy Is to

question 55

Multiple Choice

The aim of countercyclical fiscal policy is to

• A)shift the inflation adjustment line so that real GDP is equal to potential GDP.
• B)reduce unemployment.
• C)reduce inflation.
• D)increase potential GDP.
• E)shift the aggregate demand curve so that real GDP equals potential GDP.

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Definitions:

Utility Function

A mathematical representation of a consumer's preference ordering over a set of goods and services, showing the satisfaction level from consumption.

Consumption Of X

The act of using up a particular resource X or the amount of X that is used.

Units Of Y

A generic term for the measurement used to quantify the output in a given economic or mathematical model.

Utility Function

An economic model that describes how consumers rank different bundles of goods according to the levels of satisfaction or utility those bundles provide.