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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Bank X had a reputation for asking few questions when it provided loans. Five years later, the majority of the loans were not repaid. This is because the bank had failed to address the
A) moral hazard problem. B) free-rider problem. C) contrary selection problem. D) adverse selection problem.
A worker's accumulated investment in education, training, experience, and health is called:
a. derived labor demand. b. collective entrepreneurship. c. seniority. d. human capital.
Microeconomic topics do not usually include: a. how wages are determined in the labor market
b. the magnitude of national income. c. how firms choose output to maximize profits. d. how consumers maximize utility subject to a budget constraint.
Which of the following are policies that can affect cyclical unemployment?
a. adjust interest rates b. provide welfare assistance c. regulate hiring practices d. provide unemployment compensation