Critics of Stabilization Policy Argue That

question 146

Multiple Choice

Critics of stabilization policy argue that

• A)policy affects aggregate demand quickly, but the effects on aggregate demand are long-lived.
• B)policy affects aggregate demand with a lag, and the effects on aggregate demand are long-lived.
• C)policy affects aggregate demand with a lag, but the effects are short-lived.
• D)policy does not affect aggregate demand.

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Definitions:

Producer Surplus

The difference between the amount producers are willing to accept for a good or service versus what they actually receive.

Tax

A compulsory financial charge imposed by a government on individuals, corporations, or other entities to fund government spending and public services.

Market Price

The current price at which a good or service can be bought or sold in a marketplace, determined by supply and demand.

Government Subsidy

Financial assistance provided by the government to support a specific industry, entity, or activity that is considered beneficial for the public.