If the Economy Were in a Recession,which of the Following

question 8

Multiple Choice

If the economy were in a recession,which of the following policies would a person who favors an active approach to policy be most likely to support?

• A)The economy should be left to cure itself without government intervention.
• B)The Fed should sell U.S.government securities in its open-market operations.
• C)The Fed should raise the discount rate.
• D)Government purchases should increase.
• E)The Fed should raise the required reserve ratio.

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Definitions:

Fixed Manufacturing Overhead

Regular, consistent costs associated with operating a manufacturing facility that do not vary with the level of production, such as salaries and rent.

Contribution Margin

The amount by which a product's selling price exceeds its total variable costs, contributing to covering fixed costs and generating profit.

Production Constraint

A limitation or bottleneck in a manufacturing process that affects the overall output.

Contribution Margin Ratios

The proportion of sales revenue that remains after variable costs are subtracted, indicating how well a company can cover fixed costs and generate profits.