When actual output equals potential output there is ________ output gap and the rate of inflation will tend to ________.
A. an expansionary; decrease
B. an expansionary; increase
C. no; remain the same
D. a recessionary; increase
Answer: C
You might also like to view...
Resource X is necessary to the production of good Y. If the price of resource X rises,
A) the supply curve of Y shifts leftward. B) the supply curve of Y shifts rightward. C) the supply curve of Y is unaffected. D) there is a movement down the supply curve of Y. E) there is a movement up the supply curve of Y.
The economic definition of investment includes all of the following except
A. Residential construction. B. Spending for plants and capital equipment. C. A retirement portfolio of stocks and bonds. D. Net changes in business inventory.
In the United States, some groups have higher incomes than others. Which of these would be considered discrimination?
A. English professors, who are more likely to be female than engineering professors, are paid less than engineering professors. B. A male employee is paid more than an equally qualified female employee because the male employee is a manager and the female employee is not. C. White candidates for a job opening are consistently preferred over equally qualified black candidates for the same position. D. College-educated employees are consistently paid more than employees without a college education.
According to the rational expectations hypothesis, the attempt by the government to reduce unemployment below its natural rate through expansionary policies will
A. succeed because the government knows how people will react to their policies and will adjust their policies accordingly. B. succeed in the short run and can succeed in the long run as long as the government makes it clear what its goals are. C. fail because the economy can never achieve an unemployment rate below the natural level. D. fail because people will figure out what the government is doing and alter their expectations and their behavior in ways that counteract the government policy.