Fiscal Policy Is

question 47

Multiple Choice

Fiscal policy is:

• A) equally effective in dealing with real shocks as with aggregate demand shocks.
• B) more effective in dealing with real shocks than with aggregate demand shocks.
• C) less effective in dealing with real shocks than with aggregate demand shocks.
• D) not effective in dealing with either real shocks or aggregate demand shocks.

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Definitions:

Perfect Competitor

A theoretical market structure where many firms offer a standardized product, there is free entry and exit, and all buyers and sellers have perfect information, leading to price being equal to marginal cost.

Long Run

A period in which all inputs can be adjusted, allowing firms to change their production capacity and industries to enter or exit markets.

Perfect Competitor

A theoretical firm in a perfectly competitive market where it is a price taker, and there are no barriers to entry or exit.

Long Run

A time frame where all production elements and expenses can change, enabling companies to modify all resources.