A Policy That Aggressively Counters Price Shocks

question 7

Multiple Choice

A policy that aggressively counters price shocks

• A) results in larger fluctuations in output.
• B) results in higher levels of unemployment.
• C) tends to increase the output sensitivity of the aggregate demand inflation curve.
• D) all of the above.
• E) both a and c.

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Definitions:

Efficiency

The ability to achieve a goal or perform a task with the minimum amount of time, effort, or resources.

Wealth

An abundance of valuable financial assets, resources, or property owned by an individual, corporation, or country.

Act Utilitarianism

A theory of ethics which requires that individuals examine all the potential actions in each situation and choose the action that yields the greatest amount of pleasure over pain for all involved.

Ethical Theory

A system of principles designed to guide decision-making by determining what is morally right and wrong.