Which of the Following Is True

question 164

Multiple Choice

Which of the following is true?

• A)The Fed can accurately measure real GDP.
• B)The Fed can accurately measure potential GDP.
• C)Monetary policy is subject to fewer uncertainties than fiscal policy.
• D)The Fed can reliably predict the interest responsiveness of consumption and investment.
• E)The AD-IA model illustrates the various issues the Fed needs to consider when it conducts monetary policy.

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Definitions:

New Firms

Newly established business entities that often bring innovation, competition, and dynamism to their respective markets.

Long-Run Equilibrium

A state in which all factors of production and prices adjust fully to economic changes, with all markets clearing and no external pressures affecting supply and demand.

Efficient Scale

The quantity of output that minimizes average total cost.

Perfectly Competitive

A market structure characterized by a large number of small firms, homogenous products, and free entry and exit.