Which of the Following Statements About the Monetarist View of the Macroeconomy

question 82

Multiple Choice

Which of the following statements about the monetarist view of the macroeconomy is incorrect?

• A)The money wage rate is sticky.
• B)Taxes should be kept low to avoid disincentive effects that decrease potential GDP.
• C)All recessions result from inappropriate monetary policy.
• D)Left alone, the economy rarely operates at full employment.
• E)Provided that the quantity of money is kept on a steady growth path, no active stabilization is needed to offset changes in aggregate demand.

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Definitions:

Sales Volume

The number of units of a product or service sold in a specific period of time, indicative of consumer demand and business performance.

Demand Elastic

Refers to the degree to which demand for a good or service varies with its price. High elasticity indicates demand changes significantly with price changes, while low elasticity indicates little to no change.

Mark-Up Percentage

The percentage added to the cost price of goods to cover overhead and profit.

Total Variable Cost

The aggregate of all variable costs that are incurred for a particular level of output or production.