When the economy produces less than its potential output, it is:
A. called a recession.
B. not in long-run equilibrium.
C. producing a quantity less than the long-run aggregate supply quantity.
D. All of these are true.
D. All of these are true.
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The advantage of automatic stabilizers is that they
A) reduce the fluctuations in the business cycle. B) help to balance the budget. C) reduce the size of the net public debt. D) help reduce the inflation rate.
According to the Taylor Rule
What will be an ideal response?
The fraction of a change in disposable income that is spent on consumption is the
A) marginal propensity to consume. B) marginal dissaving ratio. C) expected future disposable income. D) marginal buying power of money. E) marginal propensity to dissave.
The law of marginal diminishing returns
A) is found everywhere. B) is found only in manufacturing. C) is found only in developed economies. D) is the same as the law of diminishing marginal utility.