Opponents of Using Policy to Stabilize the Economy Generally Believe

question 22

Multiple Choice

Opponents of using policy to stabilize the economy generally believe that

• A)neither fiscal nor monetary policy have much impact on aggregate demand.
• B)attempts to stabilize the economy decrease the magnitude of economic fluctuations.
• C)unemployment and inflation are not cause for much concern.
• D)economic conditions can easily change between the start of policy action and when it takes effect.

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Definitions:

Increasing Returns

A situation in production where an increase in the amount of inputs results in a disproportionately larger increase in output.

Production Isoquant

A curve that represents all combinations of inputs that produce the same level of output, used in the analysis of production technology.

Marginal Products

The additional output that is produced by using one more unit of a particular input, holding other inputs constant, critical in the analysis of production efficiency.

Profitability

A measure of the efficiency with which a company or a business utilizes its resources to generate profits.