If a Group of Economists Believes the Following Points Are

question 45

Multiple Choice

If a group of economists believes the following points are true, which is likely to be their policy making stance?
∙ Aggregate demand shocks have no long run effect on real Gross Domestic Product (GDP) or unemployment.
∙ Pure competition is widespread throughout the economy.
∙ Real wages are flexible.
∙ The Phillips Curve trade-off does not exist in the long run.

• A)They will support active policy making.
• B)They will support passive policy making.
• C)They will support discretionary policy making.
• D)They will argue that any attempt at economic policy making is futile.

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Definitions:

Social Security Taxes

Taxes collected from employees and employers to fund the Social Security program, which provides benefits to retirees, disabled persons, and survivors of deceased workers.

Unfunded Pension Liability

The shortfall between the present value of the pension obligations to employees and the assets set aside to meet those obligations.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of its financial condition.

Defined Benefit Plans

Pension plans where the employer promises a specified pension payment upon retirement, based on factors like salary and years of service.