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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This chapter stressed the importance of using appropriate samples for empirical studies. Consider the following two problems in that light
a. You are given a class assignment to find out if people's political leanings affect the newspaper or magazine that they read. You survey two students taking a political science class and five people at a coffee shop. Almost all the people you have spoken to tell you that their political affiliations do not affect what they read. Based on the results of your study, you conclude that there is no relationship between political inclinations and the choice of a newspaper. Is this a valid conclusion? Why or why not? b. Your uncle tells you that the newspaper or magazine that people buy will depend on their age. He says that he believes this because, at home, his wife and his teenage kids read different papers. Do you think his conclusion is justified?
Lowering the discount rate has the effect of ________.
A. forcing commercial banks to call in outstanding loans from their best customers B. turning required reserves into excess reserves C. turning excess reserves into required reserves D. making it less expensive for commercial banks to borrow from central banks
The change in total revenues resulting from a change in output of one unit is
A) average revenue. B) marginal revenue. C) quantity revenue. D) price revenue.
The transaction motive for holding money
A. varies inversely with income. B. varies directly with the number of times one is paid annually. C. are used to make expected expenditures. D. are held for the same reasons that precautionary cash balances are held.