Counter cyclical policies ________
A) increase the intensity of economic fluctuations
B) lead to hyperinflation
C) smooth the rate of growth of the economy over time
D) lower output below its potential level
C
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Use the figure above to answer this question. At a price level of 90
A) people will be forced to cut consumption so that aggregate demand will decrease. B) the aggregate quantity demanded exceeds real GDP and inventories will decrease. C) inventories increase and firms will increase production. D) the aggregate quantity demanded exceeds real GDP, inventories increase and the price level will rise.
The market system is said to be characterized by "consumer sovereignty." This is because:
A. A sovereign government determines which consumer goods will be produced B. The prices of consumer goods are regulated by a sovereign government C. Firms must match their production decisions to the consumers' choices D. Consumer goods are considered to be more important than capital goods