What Is Meant by an Economy's Self-Correcting Mechanism? Explain the Process

question 71

Essay

What is meant by an economy's self-correcting mechanism? Explain the process through which self-correcting mechanism reduces inflationary gap.

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Definitions:

Marginal Product

The additional output that is produced by using one more unit of a particular input.

Total Product

The overall amount of products or services generated by a company during a specified timeframe.

Average Product

The output per unit of input, calculated by dividing total output by the total quantity of input.

Production Technology

Techniques, equipment, and software used in the production of goods and services.