What is true regarding counter-cyclical fiscal policy?
A)It reinforces the business cycle.
B)It aims to balance the economy not the budget.
C)It has been described as "enhancing the prevailing winds."
D)It has no connection with the business cycle.
E)It can eliminate the business cycle.

Question

Quizplus · Accepted Answer

Counter-cyclical fiscal policy aims to balance the economy by using government spending and taxes to influence the business cycle. It is not concerned with balancing the budget.

Answer: C 
 The phrase "enhancing the prevailing winds" suggests that counter-cyclical fiscal policy works with the natural ebb and flow of the economy rather than fighting against it.

Therefore, the correct answer is B and C.

What Is True Regarding Counter-Cyclical Fiscal Policy