Countercyclical fiscal policy is viewed by most economists
a. as the perfect instrument for preventing boom and bust economies
b. as a useful but imperfect instrument for reacting to boom and bust economies
c. having no impact in the short run or long run.
d. doing more damage than good in both the short run and long run.
e. as having an impact only in the long run.
B
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The profit maximizing rule MR = MC applies to:
A. imperfectly competitive firms only. B. monopolists only. C. all firms. D. perfectly competitive firms only.
A factor that turned out to be a weakness of the classical theory of growth is its
A) emphasis on saving and investment. B) assumption that the growth rate of the population increases when income increases. C) reliance on constant growth in technology. D) neglect of the subsistence real wage.
Refer to Table 2-12. Guatemala has a comparative advantage in the production of
A) sailboats. B) canoes. C) both products. D) neither product.
Suppose the Canadian central bank wants to keep the exchange rate of the Canadian dollar with the U.S. dollar constant over time. An increase in the demand for Canadian goods by American residents will lead the Canadian central bank to
A) sell American goods in exchange for Canadian dollars. B) buy more Canadian goods with Canadian dollars. C) increase the demand for Canadian dollars in the foreign exchange market. D) increase the supply of Canadian dollars in the foreign exchange market.