Economic Fine-Tuning Is the (Usually Frequent)use of

question 141

Multiple Choice

Economic fine-tuning is the (usually frequent) use of

• A) monetary policy that is based on a predetermined steady growth rate in the money supply to counteract even small undesirable movements in economic activity.
• B) only fiscal policy to counteract even small undesirable movements in economic activity.
• C) monetary and fiscal policies to counteract even small undesirable movements in economic activity.
• D) fiscal policy that both balances the budget and counteracts even small undesirable movements in economic activity.

Understand the construction and implications of economic models and the concept of economic policy.

Explain the role of scarce resources in economics and how they relate to the production possibilities curve.

Identify the importance of investment in the accumulation of capital goods.

Appreciate the significance of marginal analysis in economics.

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Definitions:

Contribution Margin Ratio

The percentage of each sale that remains after variable costs are deducted, indicating how much revenue is contributing to fixed costs and profit.

Operating Leverage

A measure of how sensitive a company's operating income is to a change in sales, reflecting the proportion of fixed costs in the company's cost structure.

Break-even Point

The point where the amount of goods produced or sold matches the total expenses, leading to neither a profit nor a loss.

Contribution Margin

The difference between sales revenue and variable costs, used to cover fixed costs and to generate profit.