The Economy's Self-Correcting Mechanism

question 93

Multiple Choice

The economy's self-correcting mechanism

• A) prevents the economy from ever being in disequilibrium
• B) guides the economy to full employment in the long run
• C) maintains a steady long-run price level
• D) is a short-run adjustment process
• E) is controlled by the Fed

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Definitions:

Cash Outflow

The movement of money out of a business or financial account, typically as payment for expenses, assets, or liabilities.

Fixed Cost

A business expense that does not vary with the level of goods or services produced over the short term.

Interest Rate

The rate, expressed as a percentage of the principal amount, that a borrower must pay to a lender to use their assets.

Disbursement Float

The time lag between when a check is issued by a payer and when the funds are deducted from the payer's bank account.