Critics of Active Monetary and Fiscal Policy Emphasize

question 31

Multiple Choice

Critics of active monetary and fiscal policy emphasize

• A)that policy affects the economy with a lag and our ability to forecast future economic conditions is poor.
• B)"leaning against the wind" of economic change to stabilize the economy.
• C)cutting government spending, raising taxes, and reducing the money supply when aggregate demand is excessive.
• D)boosting government spending, lowering taxes, and increasing the money supply when aggregate demand is low.

---

Definitions:

Market Price

The current market price for buying or selling an asset or service in an open exchange.

Purely Competitive

A market structure characterized by many buyers and sellers, homogeneous products, and free entry and exit of firms.

Short Run

A period in which at least one factor of production is fixed, affecting the ability of a business to increase output in response to increased demand.

Marginal Cost Curve

A graphical representation showing how the cost to produce one additional unit of a good changes as production increases.