If a Policymaker Is Convinced That Time Lags Frequently Negate

question 116

Multiple Choice

If a policymaker is convinced that time lags frequently negate the impact of short-run stabilization efforts, it is likely she would favor ________ policymaking.

• A) nondiscretionary
• B) discretionary
• C) active
• D) aggressive

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Definitions:

Fixed Expenses

Expenses that remain constant regardless of variations in the level of production or the volume of sales, like lease payments or wages.

Degree Of Operating Leverage

A financial ratio that measures the sensitivity of a company's operating income to its sales volume, indicating the impact of fixed costs on earnings.

Variable Expenses

Expenses that vary directly with the amount of activity or production volume.

Fixed Expenses

Expenses that do not change with the level of production or sales, remaining constant regardless of business activity levels.