The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output.
B. government policy.
C. decreasing inflation only.
D. increasing or decreasing inflation.
Answer: D
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At the start of a cost-push inflation,
A) the price level rises and real GDP does not change. B) the price level remains constant and real GDP increases. C) the price level rises and real GDP decreases. D) the price level remains constant and real GDP decreases. E) the price level and real GDP both increase.
According to chapter 1 in your textbook,
A) all economists approach questions with some preconceptions or prejudices. B) economists (and others) ought to approach all questions with a completely open mind, though they often do not. C) economists approach questions with more of an open mind than do most other social scientists. D) most economists approach questions with a completely open mind. E) most economists derive their conclusions from their political preferences.
An exogenous increase in domestic investment will
a. increase foreign capital flows into the country. b. increase domestic capital flows to foreign countries. c. reduce domestic interest rates. d. both a and b. e. none of the above.
Choose the statement about an effective minimum wage that is correct:
What will be an ideal response?