The Mainstream View Is That Macro Instability Is Caused by the Volatility

question 50

True/False

The mainstream view is that macro instability is caused by the volatility of the money supply, which
constantly shifts the aggregate demand curve around.

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Definitions:

Higher Wage

A wage level that is above the average or norm, often reflective of high skill levels, demand for specific labor, or union negotiations.

Income Effect

The change in the quantity of a good consumed that results from the change in a consumer’s purchasing power due to the change in the price of the good.

Substitution Effect

The adjustment in consumer behavior because of shifts in the prices of goods relative to each other, causing consumers to choose different goods over previously preferred ones.

Normal Good

A good whose demand increases as consumer income increases, demonstrating how economic well-being influences consumer choices.