To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change.
B. increase.
C. decrease.
D. either increase or decrease depending on the relative shifts of AD and AS.
Answer: C
You might also like to view...
A demographic trend is that:
a. Individuals increasingly put off marriage and childbirth to later years b. The number of families is decreasing c. Families are the same as they were two decades ago d. Grandparents matter less than they used to
Which of the following is not a characteristic of a monopolistically competitive market?
A. Firms hold patents on their products. B. The products that firms sell are slightly different. C. Firms have some control over price. D. There are no artificial barriers to entry.
The market in which banks borrow from other banks for short periods of time is the
a. discount market b. federal funds market c. interbank loan market d. national bank market e. liquidity market
Suppose the market for nursing services in a local community is so dominated by a single community hospital that for all practical purposes it is considered a monopsony. Using the diagram below, answer the question.
What is the equilibrium wage and level of employment under monopsony? a. W0 and E0 b. W2 and E0 c. W1 and E1 d. W0 and E1