Which of the Following Statements Is True

question 92

Multiple Choice

Which of the following statements is true?

• A) When an economy operates at the full employment level, it is at a point above its production possibility frontier.
• B) Government de?cits tend to increase during recessions.
• C) An economy that is booming is at its full employment level.
• D) As economies boom, tax receipts fall and government spending increases.

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Definitions:

Effective Interest Rate

The actual return on an investment or the actual cost of a loan, taking into account the compounding of interest over time, as opposed to the nominal interest rate.

Short-Term Bank Loan

A loan obtained from a bank that has a short repayment period, typically less than one year.

Best Course of Action

The most suitable or advantageous strategy or decision to take in a given situation.

Annual Rate

The interest rate for a whole year, as opposed to a rate for a shorter period.