Examlex

Solved

Suppose the Economy Is at a Position Below the Physical

question 147

Multiple Choice

Suppose the economy is at a position below the physical production possibilities frontier but above the institutional production possibilities frontier.In response to this situation,Keynesian economists may propose that government enact __________ fiscal policy to correct this __________ gap by __________ government expenditures.


Definitions:

Loanable Funds

The funds available for borrowing in the financial markets, derived from the savings of individuals and institutions.

Price Floor

A price floor set by a government or an organization, establishing the minimum price that can be charged for a good, service, or resource.

Price Ceiling

A cap set by authorities on the maximum price that can be asked for a good or service.

Shortage

Occurs when the demand for a product or service exceeds its supply in a given market, often leading to increased prices.

Related Questions