Aggregation Reduces the Standard Deviation of Demand Only If Demand

question 46

True/False

Aggregation reduces the standard deviation of demand only if demand across the regions being aggregated is not perfectly positively correlated.

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Definitions:

Extensive Government Spending

A fiscal policy where the government spends significant resources on public services, programs, and projects to stimulate economic growth or achieve social objectives.

Externality Problems

Issues arising from the impact of one person's actions on the well-being of a bystander, which are not reflected in market prices.

Marginal Benefit

The extra pleasure or advantage obtained from acquiring or generating an additional unit of a product or service.

Tax Cost

The economic expense associated with the imposition of taxes, including the burden on consumers or producers.