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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Which of the following is TRUE of incentives?
A) Different people are motivated by different incentives. B) Money is the only measure of incentives. C) All of the people in a particular nation are motivated by the same incentives. D) In economics, people are assumed to respond to disincentives instead of incentives.
After trading in her Volkswagen Beetle for a much safer Mercedes sedan, Rene began driving less carefully. This is an example of: a. adverse selection
b. free-riding. c. moral hazard. d. Positive externalities.
The demand curve for capital is
a. its entire marginal physical product curve. b. the downward-sloping portion of its marginal physical product curve. c. its entire marginal revenue product curve. d. the downward-sloping portion of its marginal revenue product curve.
If the federal government began granting a subsidy of 10 cents per apple to apple growers and as a result the price of apples to consumers falls by 8 cents,
a. the actual benefit of this subsidy goes mostly to consumers. b. the actual benefit of this subsidy goes mostly to producers. c. the actual benefit of this subsidy would be shared equally by producers and consumers. d. nobody would benefit from the subsidy.