A Problem with the Use of Aggregate Demand Management to Stabilize

question 53

Multiple Choice

A problem with the use of aggregate demand management to stabilize the business cycle is that

• A)monetary policy isn't available to use when interest rates are already rising because of higher inflation.
• B)fiscal policy takes a long time to have any impact on the economy.
• C)monetary policy is difficult to use, because the decision-making process is long and complicated.
• D)the precise amount that output will change in response to monetary or fiscal policy isn't known.

---

Definitions:

Raw Materials

The basic materials from which products are made, typically not yet processed or used in manufacturing.

Finished Products

Goods that have completed the manufacturing process but have not yet been sold or distributed to end customers.

Labor Costs

The total expenditure incurred by employers to compensate employees, including wages, salaries, benefits, and taxes.

Contracted Labor

Work performed by individuals or companies who are not employees but are hired on a contract basis.