To Support the Argument for an Active Role for Government

question 43

Multiple Choice

To support the argument for an active role for government in stabilizing the economy,it must be true that

• A) consumers are not rational and that not all wages and prices are flexible.
• B) not all wages and prices are flexible and that government must be able to react quickly enough.
• C) government must be able to react quickly enough and that shocks to the economy be primarily due to aggregate supply shocks.
• D) shocks to the economy be primarily due to aggregate supply shocks and that consumers are not rational.
• E) consumers are not rational and shocks to the economy are primarily due to aggregate demand.

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Definitions:

Operating Expenses

The costs associated with a company's main operational activities, excluding the cost of goods sold, interest, and taxes.

Income from Operations

The earnings generated from a company's core business operations, excluding any income from investments or other non-operational sources.

Net Sales

Revenue from sales after deducting returns, allowances for damaged goods, and discounts.