The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment.
B. exogenous spending.
C. recessionary gaps.
D. expansionary gaps.
Answer: D
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A rational decision is one that
A. satisfies all desires. B. avoids the intentional allocation of resources. C. assigns available resources in the manner most preferred by decision makers. D. assigns available resources to the uses with the lowest opportunity costs.
Economists view the “tragedy of the commons” as a problem of:
a. free riding. b. selfishness. c. exclusion. d. property rights.
Suppose that the real return from operating factories in Canada rises relative to the real rate of return in the United States. Other things the same,
a. this will increases U.S. net capital outflow and decrease Canadian net capital outflow. b. this will decreases U.S. net capital outflow and increase Canadian net capital outflow. c. this will only increase U.S. net capital outflow. d. this will only increase Canadian net capital outflow.
Which economic perspective would be most closely associated with the view that discretionary monetary policy is an effective force for stabilizing the economy?
A. Monetarism B. Mainstream economics C. Rational expectations D. New classical economics