Active Macroeconomic Policy Would Move to Close an Expansionary Gap

question 63

True/False

Active macroeconomic policy would move to close an expansionary gap by decreasing aggregate demand.

---

Definitions:

Marginal Revenue

The increase in financial returns a business achieves by disposing of one more unit of a good or service.

Marginal Cost

Marginal cost is the additional cost incurred from producing one more unit of a good or service, vital for decision-making on production levels.

Purely Competitive Firm

A company in a market where there are many buyers and sellers, the products are homogeneous, and there are no barriers to entry or exit, leading to zero economic profit in the long run.

Sinking Funds

Specialized funds set aside or saved by a company to repay debt or bonds, or to replace capital assets in the future.