An Unexpected Feature of Chile's Stabilization Program in the 1970s

question 12

Multiple Choice

An unexpected feature of Chile's stabilization program in the 1970s was that:

• A) export growth was weak after the real exchange rate appreciated.
• B) the economy stabilized without requiring fiscal austerity.
• C) the market's self-correcting mechanisms worked smoothly and quickly to eliminate the imbalances.
• D) inflation stayed high despite tight monetary policy and a big drop in the fiscal deficit.

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Definitions:

Variable Costs

Expenses that change in proportion to the production volume or output level.

Graphical Approach

A method of solving problems or understanding data by using graphical representations, such as charts or graphs.

CVP Analysis

Cost-Volume-Profit analysis is a method used in managerial accounting to understand how changes in costs, sales volume, and price affect a company's profit.

Material Cost

The expense incurred by a company to purchase or produce the raw materials used in manufacturing a product.