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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Theory suggests that stock prices should be positively related to
A) government borrowing. B) the unemployment rate. C) the interest rate. D) the money supply.
Which of the following is not held constant in the short run when determining the aggregate supply curve?
a. Interest rates b. Rent c. Wages d. Profit e. Price level
Loans made between borrowers and lenders are:
A. usually not taxable at the federal level. B. legal only in the state of origination. C. assets of the borrowers. D. assets of the lenders.
Refer to the above figure. From the standpoint of society, the optimal output is
A. Q1 B. Q2 C. Q3 D. Q4