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 costs of investment depend on the ________ and the ________.
A. price of new capital goods; real interest rate B. relative price of the firm's output; real interest rate C. marginal product of capital; relative price of the firm's output D. taxes levied on the revenue generated; relative price of the firm's output
Always There Wireless is wireless monopolist in a rural area. There are 200 customers, each of whom has a monthly demand curve for wireless minutes of Qd = 200 - 100P, where P is the per-minute price in dollars and Q is the number of wireless minutes. The marginal cost of providing the wireless service is $0.25 per minute. If Always There charges $0.50 per minute and the largest fixed fee that it can at that price, what is the difference in profit per customer compared to when it charges $0.25 per minute and the largest fixed fee that it can at that price?
A. Profit per customer is the same in both cases, and it is equal to zero. B. Profit per customer is the same in both cases, and it is positive. C. Profit is $3.13 per customer higher at a price of $0.50. D. Profit is $3.13 per customer higher at a price of $0.25.
Central banks sometimes attempt quantitative easing when
A) money growth is too high. B) inflation is too high. C) there is a liquidity trap. D) inflation is too low.
The Consumer Price Index (CPI) excludes goods imported from other countries and consumed by residents of the United States
a. True b. False