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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The difference between the minimum price the producer is willing to accept and the price the producer actually receives for a product is referred to as:
a. market surplus b. market shortage c. buyer surplus d. seller surplus.
If the price level does not fall or only falls very slowly, then the result will be a prolonged period of
a. inflation whenever supply increases. b. production below potential GDP. c. production above potential GDP. d. rapid price increases when demand changes.
An "originate-to-distribute" strategy means:
a. Mortgage originators make loans with the intention of having investors purchase and hold them. b. Mortgage originators make loans with the intention of keeping these assets on their balance sheets. c.Innovative mortgage loans are more likely to be sold and distributed to investors' than standard, run-of-the-mill mortgage loans. d. Originating loans is a lengthy process that requires originators to hold mortgages for longer periods than they want. Therefore, a strategy is needed for to distribute these loans as soon as the holding period is done.
Which of the following is a correct definition of marginal cost (MC)?
a. It is the added cost that results from hiring one more employee. b. It is the increase in the average cost that results from producing one more unit of a good. c. It is the decrease in profits that results from selling another unit of a good. d. It is the cost per unit of a good produced -- i.e., total cost divided by quantity. e. It is the added cost that results from producing one more unit of a good.