For Those Who Favor an Active Approach,public Policy Changes Are

question 117

Multiple Choice

For those who favor an active approach,public policy changes are necessary to cure a recessionary gap because

• A)the short-run aggregate supply curve will otherwise shift quickly to the right
• B)prices and wages are flexible downward but not upward
• C)the required decrease in output can be achieved only by shifting the AD curve
• D)real wages must fall through price increases rather than waiting for money wages to fall
• E)falling money wages will cause the AD curve to shift leftward unless policy counters this movement

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Definitions:

Depreciation

The reduction in the value of an asset over time, often due to wear and tear or the passage of time.

Inventory Investment

The stock of goods or raw materials kept by a business to meet future sales or production needs.

Hybrid Varieties

Plant varieties developed through the crossbreeding of two genetically different parent plants, aiming to produce offspring with desirable traits from both.

Partnerships

A form of business organization in which two or more individuals share ownership, responsibilities, and the profits or losses of the enterprise.