An Advantage of Macroeconomic Policy Based on Pre-Specified Rules Might

question 36

Multiple Choice

An advantage of macroeconomic policy based on pre-specified rules might be that ________.

• A)it is easier to stick to long-run considerations and avoid bad long-run outcomes
• B)it is more flexible than discretionary policy
• C)it is easier to adapt to short-run changes and avoid a bad short-run outcome
• D)all of the above
• E)none of the above

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Definitions:

Budgeted Output

The anticipated quantity of goods or services a company plans to produce in a specified period, usually tied to budgeting and planning processes.

Standard Cost

A predetermined or estimated cost of producing a product or service, used as a benchmark for measuring actual production costs.

Actual Production

The real quantity of products manufactured during a specific period, as opposed to planned or projected production.

Material Price Variance

The difference between the actual cost of materials and the standard cost, multiplied by the quantity of materials used.