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:

Closing Entries

Journal entries made at the end of an accounting period to transfer balances from temporary accounts to permanent accounts.

Accounting Period

The span of time at the end of which a company calculates its financial performance, typically a quarter or year.

Journalized

The act of recording a transaction in an accounting journal, documenting the financial activities of a business.

Retained Earnings

Represents the portion of net income that is retained by the company rather than being distributed to its owners or shareholders.