In Order to Make Effective Policy Changes, Policy Makers Need

question 159

Multiple Choice

In order to make effective policy changes, policy makers need to know

• A) where the economy is going to be six to twelve months from now.
• B) the magnitude of past recessions.
• C) Keynesian economics.
• D) the exact size of the current M1 money supply.

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Definitions:

Public Goods

Goods that are non-excludable and non-rivalrous, meaning individuals cannot be effectively excluded from use, and where use by one individual does not reduce availability to others.

Consumer Surplus

The difference between the total amount consumers are willing and able to pay for a good or service and the total amount they actually pay.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service and the actual price they receive.

Below Equilibrium Price

A situation where the price of a good or service is set lower than the market equilibrium, often leading to a shortage.