Question

What is functional finance? A. A view that because the Ricardian equivalence theorem is true in theory and practice, the government should not use deficit spending. B. A view that government should make spending and taxing decisions on the basis of their effect on the economy rather than concern itself with balancing the budget. ° C. A moral view that the government budget should always be balanced except in wartime. O D. A view that deficit spending will crowd out private investment, eliminating the effect of deficit spending on the economy.

Answer 1

Functional Finance is

A view that government should make spending and taxing decisions in basis of effect on economy rather than concern about balancing budget.

This is true becauser functional finance is aimed at maintaining stability and using right tools without thinking for budget deficit .