If the Correction Process That Eventually Eliminates Output Gaps Works

question 127

Multiple Choice

If the correction process that eventually eliminates output gaps works very slowly,so that actual output differs from potential output for long periods of time,then active

• A) stabilization policies are probably not justified.
• B) stabilization policies may end up doing more harm than good.
• C) use of monetary and fiscal policy can cause actual output to overshoot potential output.
• D) use of monetary and fiscal policy can help to stabilize output.
• E) stabilization policies can cause the output gap to become larger.

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Definitions:

Intrastate

Activities or commerce that occur exclusively within the boundaries of a single state and are not subject to federal jurisdiction.

Alien

A foreign national who is not a citizen of the country in which they are living.

Foreign

Relating to or originating from a country other than one's own, often associated with international laws, transactions, or entities.

Interstate

Relating to or involving more than one state, usually in reference to commerce or transportation that crosses state lines.