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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Absolute advantage is based on opportunity cost
a. True b. False
The immediate effect of a bank's purchase of U.S. government securities from the Fed is a(n): a. decrease in the bank's assets
b. increase in the bank's assets. c. decrease in the Fed's assets. d. increase in the Fed's assets. e. decrease in both the bank's and the Fed's assets.
What is the best definition for rules of thumb?
a. universal principles that apply to economic situations across time and culture b. limitations placed on the ability of humans to problem solve effectively c. decision-making shortcuts based on what seems to have worked well in the past d. ways of circumventing traditional economic principles in order to maximize utility
Which of the following will lead to an appreciation of the U.S. dollar against the British pound?
A. an increase in U.S. demand for British imports B. a decrease in British demand for U.S. assets C. an increase in British demand for U.S. imports D. an increase in British interest rates