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) lets chronic deficits magnify into a national debt, allowing them 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 deficits during downturns which can lead to chronic deficits and a national debt if not managed properly.

A Disadvantage of Functional Finance Is That It _____