Which of the following best describes the philosophy of functional finance?
A)The federal budget should be balanced each year.
B)A federal budget deficit should be permitted only during a business expansion.
C)A federal budget deficit should be permitted only during a recession.
D)Policy makers should focus on keeping the unemployment rate at the natural rate,even if this means budget deficits.
E)Policy makers should be less concerned about budget deficits and more concerned with increasing the natural rate of unemployment.

Question

Quizplus · Accepted Answer

Functional finance advocates for the use of fiscal policy to maintain full employment, with budget deficits being acceptable in order to achieve this goal. The focus on unemployment is consistent with this philosophy, and choice D reflects this emphasis. The other choices do not align with functional finance principles.

Which of the Following Best Describes the Philosophy of Functional