Final Exam- Funeral Directing Questions And Answers

physical capital {Ans: The stock of equipment and structures used to produce goods and services}Automatic stabilizers {Ans: changes in fiscal policy that stimulate aggregate demand when the economy goes into a recession without policymakers having to take any deliberate action}sacrifice ratio {Ans: the number of percentage points of annual output lost in the process of reducing inflation by percentage point}Why Does the Aggregate-Demand Curve Slope Downward? {Ans: - The Wealth Effect: A lower price level increases real wealth, stimulating spending on consumption. - The Interest-Rate Effect: A lower price level reduces the interest rate, stimulating spending on investment. - The Exchange-Rate Effect: A lower price level causes the real exchange rate to depreciate, stimulating spending on net exports.}Advocates of the theory of rational expectations believe that {Ans: the sacrifice ratio can be much smaller if policymakers make a credible commitment to low inflation.}multiplier effect {Ans: the additional shifts in aggregate demand that result when expansionary fiscal policy increases income and thereby increases consumer spending}From one year to the next, inflation falls from 5 to 4 percent, while unemployment falls from 7 to 6 percent. Which of the following events could be responsible for this