A Policymaker in Favor of Stabilizing the Economy Would Be

question 12

Multiple Choice

A policymaker in favor of stabilizing the economy would be likely to believe

• A)recessions are a waste of resources.
• B)economies must suffer through the booms and busts of the business cycle.
• C)the long policy lags make implementing policy changes in response to recession too risky.
• D)policy increases the magnitude of economic fluctuations.

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Definitions:

Price Ceiling

A legal maximum price that can be charged for a product or service, often set by government to control costs for consumers.

Price Floor

A government-imposed limit below which prices cannot fall, often set to protect producers.

Rent

A periodic payment made by a tenant to a landlord for the use of land, a building, or other property.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a given time period.