If velocity remains relatively constant, changes in the money supply can have a predictable effect on nominal GDP.
Answer the following statement true (T) or false (F)
True
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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.
The patent and copyright systems
a. reduce the cost of duplicating intellectual property b. help make the market for intellectual property more competitive c. are forms of intellectual property d. help increase the incentives to create new intellectual property e. help reduce the incentives to create new intellectual property
Automatic stabilizers "lean against the prevailing wind" of the business cycle because:
A. wages are controlled by the minimum wage law. B. federal expenditures and tax revenues change as the level of real GDP changes. C. the spending and tax multipliers are constant. D. they include the power of special interests.
An important advantage of a fixed-exchange-rate system is that it
A. promotes the growth of international trade and international financial transactions, by reducing the risk to market participants that exchange rates will change unexpectedly and substantially. B. prevents an exchange rate from becoming overvalued. C. protects the domestic economy from being hit by foreign shocks. D. prevents an exchange rate from becoming undervalued.