The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output.
B. government policy.
C. decreasing inflation only.
D. increasing or decreasing inflation.
Answer: D
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Answer the following statement(s) true (T) or false (F)
1. An economic model is robust if it provides results that are testable and verifiable. 2. An easy, but not very insightful, possible explanation for apparently irrational behavior is that it is rational for a people with a taste for the behavior. 3. Most economic explanations can be reduced to the idea that human behavior is primarily a matter of taste. 4. Since economists assume that people act in their own self-interest, economic analysis does not apply to situations where people behave altruistically. 5. A model that is said to be robust is one that has many details and closely mimics reality.
High opportunity costs go hand in hand with high money costs in a properly functioning economy.
Answer the following statement true (T) or false (F)
Which of the following statements best describes a consumer's budget line?
A) It shows all combinations of goods among which the consumer is indifferent. B) It shows the limits to a consumer's set of affordable consumption choices. C) It shows the desired level of consumption for the consumer. D) It shows the consumption choices made by a consumer.
All of the following are common to banking crises in different countries EXCEPT
A) financial liberalization or innovation. B) weak bank regulatory systems. C) a government safety net. D) a dual banking system.