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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A market-clearing curve for a good:
A. shows the quantities supplied and demanded for a particular product. B. shows the combinations of prices, both for that good and for other related goods, that bring supply and demand for the good into balance. C. shows the quantities supplied and demanded for all goods. D. shows equilibrium in a particular market.
Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPods or 10 tablets each year. Country B has 200 workers. Suppose Country B's population of workers increased to 600. Which of the following statements is now true?
A. Country B's production possibilities curve has rotated out for only production of iPods. B. Country B's production possibilities curve has shifted straight out. C. Country B's production possibilities curve has shifted straight in. D. Country B's production possibilities are now more limited because of crowding from having more workers.
German luxury car exports were hurt in 2009 as a result of the recession. How would this decrease in exports have affected Germany's aggregate demand curve?
A) The aggregate demand curve would have shifted to the right. B) The aggregate demand curve would have shifted to the left. C) The aggregate demand curve would not have shifted, but there would have been a movement down the aggregate demand curve. D) The aggregate demand curve would not have shifted, but there would have been a movement up the aggregate demand curve.
An advance in farm technology that results in an increased market supply is
a. good for farmers because it raises prices for their products but bad for consumers because it raises prices consumers pay for food. b. bad for farmers because total revenue will fall but good for consumers because prices for food will fall. c. good for farmers because it raises prices for their products and also good for consumers because more output is available for consumption. d. bad for farmers because total revenue will fall and bad for consumers because farmers will raise the price of food to increase their total revenue.