According to New Classical Economists, the Most Appropriate Policy During

question 111

Multiple Choice

According to new classical economists, the most appropriate policy during a recession would be for the government to

• A) increase the minimum wage.
• B) impose wage and price controls.
• C) cut taxes and increase the budget deficit.
• D) do nothing.

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Definitions:

Utility Rates

Charges imposed by utility companies for the use of services such as electricity, gas, water, and sewer.

Contribution Margin

The amount by which the sale of a product or service exceeds its variable costs, used to cover fixed costs and contribute to net income.

Fixed Costs

Expenses that do not change with the level of production or sales over a relevant period, such as rent, salaries, and insurance.

Break-even Sales

The amount of sales needed to cover all fixed and variable costs, resulting in zero profit.