When the Government Develops Policies to Stabilize the Economy

question 118

Multiple Choice

When the government develops policies to stabilize the economy

• A) these policies are unaffected by the multiplier effect.
• B) only expansionary fiscal policy is impacted by the multiplier effect.
• C) it needs to consider the multiplier effect for all fiscal policies.
• D) only contractionary fiscal policy is impacted by the multiplier effect.

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Definitions:

Hyperinflation

A very high rate of inflation.

Deflation

A decrease in the general price level of goods and services in an economy over a period, often leading to increased purchasing power of the currency.

Inflation

The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Disinflation

A reduction in the rate of inflation