An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase
B. increase; increase
C. decrease; decrease
D. increase; decrease
Answer: D
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Frictional unemployment may be economically beneficial if:
A. losses in economic output are small. B. its psychological costs are borne only by the unemployed worker. C. the social costs are limited to smaller tax revenues collected. D. it leads to a better match between worker and job.
An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
The relationship between real GDP and potential GDP is that
A) real GDP always equals potential GDP. B) real GDP never equals potential GDP. C) real GDP fluctuates about potential GDP. D) real GDP is always below potential GDP.
The account that records a nation's economic transactions with other countries is
a. the current account b. the international monetary fund c. the foreign exchange market d. the balance of payments e. the capital account