How Do Critics of Discretionary Stabilization Policy View Frequent Changes

question 45

Multiple Choice

How do critics of discretionary stabilization policy view frequent changes in spending and tax policy?

• A)The changes make the economy smoother, although it may not look that way to individual firms.
• B)The changes make life more difficult and hectic for Congress and the Fed.
• C)The changes smooth out the business cycle, making planning easier.
• D)The changes cause more instability in the economy and make planning more difficult.

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Definitions:

Total Revenue

The total amount of money generated by a business from its sales of goods or services before any expenses are subtracted.

Inelastic Segment

The inelastic segment defines a range within the demand curve where the quantity demanded changes very little in response to changes in price. Demand is relatively insensitive to price adjustments.

Total Revenue

The overall sum of money received by a company or individual from the sale of goods or services, before any expenses are subtracted.

Marginal Revenue

The additional income generated from selling one more unit of a good or service, crucial for decision-making in production and pricing strategies.