In order to isolate the income adjustment mechanism,we assume that:
A)the nation operates under a fixed exchange rate system
B)all prices,wages,and interest rates are constant
C)the nation operates at less than full employment
D)all of the above

Question

Quizplus · Accepted Answer

To isolate the income adjustment mechanism, it's assumed that the nation operates under a fixed exchange rate system, all prices, wages, and interest rates are constant, and the nation operates at less than full employment. These conditions simplify the analysis by controlling for variables that could otherwise affect the outcome.

In Order to Isolate the Income Adjustment Mechanism,we Assume That