The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier.
B. self-correcting property.
C. short-run equilibrium property.
D. long-run equilibrium property.
Answer: B
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Economies of scale refer to the range of output over which
A) marginal cost exceeds average cost. B) the long-run average cost falls as output increases. C) the marginal product of labor diminishes. D) the long-run average cost is less than the short-run average total cost.
If the economy is in equilibrium at less than full employment, Keynesian economists would recommend that the government
a. do nothing b. pursue fiscal policy to stimulate aggregate demand c. pursue fiscal policy to stimulate aggregate supply d. balance the budget e. cut government spending to eliminate deficit spending
If we observe that every increase in income of $120 million generates an increase in consumption of $80 million, then the simple multiplier is
a. 2/3. b. 3/2. c. 2. d. 3. e. 8.
The deliberate manipulation of government purchases, taxation, and transfer payments to promote macroeconomic goals is called using automatic stabilizers
Indicate whether the statement is true or false