Which of the following is most representative of the functional finance view of the macroeconomy?
A. Budgets should be balanced. Doing otherwise is morally wrong.
B. The government should decide on tax and spending plans based on their effects on the economy.
C. The economy is self-regulating and the best thing the government can do to enhance stability is to stay out of the way.
D. Crowding out almost completely cancels out any deficit spending, so fiscal policy is likely to be ineffective.
Answer: B
You might also like to view...
State what, if anything, each of the following does to the supply or demand of loanable funds
a. net capital outflow increases at each interest rate b. domestic investment increases at each interest rate c. the government deficit increases d. private saving increases
The law of increasing opportunity cost implies that
A) producing additional units of one good results in proportionately smaller reductions in output of the other good. B) producing additional units of one good results in increasing amounts of lost output of the other good. C) the production possibilities curve will be a straight line. D) the society will be producing on its production possibilities curve.