CFA Practice Question

CFA Practice Question

Which of the following is correct?
A. FOMC meets every few weeks, so for monetary policy the administrative gap is small.
B. If the government follows a policy of balancing budgets, it would act like an automatic stabilizer.
C. 'Crowding Out' is the idea that government expenditure increases private investment.
Explanation: Balanced budgets would be destabilizing, for example in recessions they would result in either higher proportional taxes or cuts in government expenditures. 'Crowding Out' is the idea that government expenditure decreases private investment. Balancing the budget means cutting government expenses during times of recessions to maintain parity with falling tax revenues (due to lower incomes) or increasing tax rates.

User Contributed Comments 3

User Comment
Confucion FOMC doesn't meet every few weeks. They usually meet every 5-6 weeks.
leftcoast Confucion...lol you're pulling at straws here.

So your view of what a "few weeks" means doesn't align with 5-6. The other two are still obviously wrong.
cfastudypl Confucion, pls leave the form and focus on the substance.
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