A disadvantage of functional finance is that it:
A)does not focus on producing the potential level of output in an economy.
B)increases the level of unemployment during recessions.
C)allows chronic deficits that magnify into national debt,allowing it to reach an alarming level.
D)requires that the budget is balanced even during times of war.
E)magnifies fluctuations in the business cycle.

Question

Quizplus · Accepted Answer

Functional finance allows for chronic deficits without a focus on balancing the budget, which can lead to an increase in national debt that reaches unsustainable levels. This can have negative consequences for the economy in the long term.

A Disadvantage of Functional Finance Is That It