The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment.
B. exogenous spending.
C. recessionary gaps.
D. expansionary gaps.
Answer: D
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Suppose that a hurricane destroys part of the tobacco crop in North Carolina
What willhappen to the price of tobacco? What will happen to the marginal product of tobacco field workers as a result of the hurricane? Can we tell what will happen to the demand for tobacco field workers? Explain.
When calculating the price elasticity of demand, which of the following conditions must be satisfied?
A) All other factors that influence demand must be held constant. B) Prices of related goods must be held constant but all other factors must be allowed to vary. C) Prices of related goods must be allowed to vary but all other factors must be held constant. D) All other factors than influence demand must be allowed to vary.
Rational inattention refers to ________
A) the risk a firm runs when they do not pay attention to their customers B) firms making infrequent price decisions because of the time and effort those decision require C) the cost to the firm of losing sales from alienating customers D) all of the above E) none of the above
Which of the following statements is TRUE about the relationship between high birthrates and real GDP growth?
A) High birthrates in countries with little economic freedom will lead to higher labor force participation rates that in turn lead to higher growth of real GDP. B) High birthrates reduce per capita incomes, and a lack of economic freedom inhibits real GDP growth. C) There is no relationship between birthrates and real GDP growth. D) The influence that birthrates have on real GDP growth is the same in countries whether or not economic freedom exits.