Before World War II
A) "fiscal policy" consisted of attempting to balance the budget at the full-employment output level.
B) "fiscal policy" consisted of attempting to balance the budget at every output level.
C) "monetary policy" consisted of attempting to balance the budget at the full-employment output level.
D) "monetary policy" consisted of attempting to balance the budget at every output level.

Question

Quizplus · Accepted Answer

Before World War II, the concept of "fiscal policy" primarily revolved around efforts to balance the budget at every output level, rather than targeting specific economic conditions such as full employment. This approach was based on the classical economic belief in maintaining a balanced budget as a principle of good governance, without the active use of fiscal policy tools for managing economic cycles that became prevalent later.