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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If the exchange rate rises, foreign residents want to purchase ______ domestic goods and domestic residents want to purchase _____ foreign goods. In the market for foreign-currency exchange, these changes are shown as a _______ in the quantity of dollars ______
Fill in the blank(s) with correct word
The government increases both its expenditures and taxes by $400 billion. There is no crowding out and no accelerator effect. Aggregate demand shifts by $400 billion. Which of the following is consistent with how far aggregate demand shifts?
a. MPC = 1/2, and the effects of the increase in taxes is 1/2 as strong as the change in government expenditures. b. MPC = 2/3, and the effects of the increase in taxes is 2/3 as strong as the change in government expenditures c. MPC = 3/4, and the effects of the increase in taxes is 3/4 as strong as the change in government expenditures d. All of the above are correct.
In the Keynesian model, it is assumed that, when demand for a firm's product changes, the firm changes:
A. production levels to meet the demand. B. prices, but holds production levels constant, to meet the demand. C. prices to meet the demand. D. prices and production levels to meet demand.
Assume that the price of a Bluray player is $50. If Joshua is willing to pay $50 for that Bluray player, his consumer surplus when he buys the BLuray player is:
A. $0. B. $1. C. $10. D. $50.