Which of the following is most representative of the functional finance view of the macroeconomy?
A)The economy is self-regulating and the best thing the government can do to enhance stability is to stay out of the way.
B)Budgets should be balanced. Doing otherwise is morally wrong.
C)The government should decide on tax and spending plans based on their effects on the economy.
D)Crowding out almost completely cancels out any deficit spending, so fiscal policy is likely to be ineffective.

Question

Quizplus · Accepted Answer

The functional finance view holds that government should use fiscal policy (tax and spending decisions) to achieve economic goals such as full employment and price stability, rather than focusing on balancing budgets or avoiding deficit spending.

Which of the Following Is Most Representative of the Functional