According to the Active Policy Approach, the Elimination of a Recessionary

question 22

Multiple Choice

According to the active policy approach, the elimination of a recessionary gap _____

• A) can only be achieved by decreasing wages.
• B) requires a public policy of wage and price controls.
• C) should be accomplished by stimulating aggregate demand.
• D) will increase unemployment.
• E) will cause a recession.

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Definitions:

Asset Utilization Ratios

Ratios that measure how well a firm uses its assets to generate each $1 of sales.

Short-Term Assets

Assets that are expected to be converted into cash or used up within one year or within the business's operating cycle if longer than a year.

Quick Ratio

A financial metric that measures a company's ability to meet its short-term obligations with its most liquid assets.

Liquidity

The ease with which an asset can be converted into cash without affecting its market price.