Countercyclical Fiscal Policy Is Risky Because

question 133

Multiple Choice

Countercyclical fiscal policy is risky because

• A)it tends to increase the national debt.
• B)real GDP is likely to be close to potential GDP by the time the policy takes effect.
• C)it tends to have no effect on unemployment.
• D)it tends to make recessions more severe.
• E)it tends to result in higher inflation.

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Definitions:

Distorted Ways

Refers to cognitive distortions, which are irrational or exaggerated thought patterns that can lead to negative emotions and behaviors.

Physical Causes

Factors or events in the physical world that bring about a change or result.

Sigmund Freud

An Austrian neurologist and the founder of psychoanalysis, a clinical method for treating psychopathology through dialogue between a patient and a psychoanalyst.

Mental Causes

Factors originating in the mind that can lead to certain behaviors or psychological states.