The Advantage of Government Intervention When a Shock Hits an Economy

question 34

Multiple Choice

The advantage of government intervention when a shock hits an economy is

• A)the composition of output changes.
• B)the real interest rate remains unchanged.
• C)the real interest rate rises.
• D)an efficient outcome is achieved faster.
• E)the price level rises.

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Definitions:

Bond

A fixed income instrument representing a loan made by an investor to a borrower, typically corporate or governmental.

Purchase Cost

The total expense incurred to acquire an asset, including the purchase price and associated costs.

360-Day Year

A financial convention or simplification to treat all months as 30 days in duration for the ease of interest calculations and financial analysis.

Commission

A fee or percentage of a sale paid to an employee or agent for facilitating or completing a sale.