If aggregate quantity demanded exceeds aggregate quantity supplied, we can expect an unplanned
a. depletion of inventories, causing firms to raise prices.
b. depletion of inventories, causing firms to lower prices.
c. accumulation of inventories, causing firms to raise prices.
d. accumulation of inventories, causing firms to lower prices.
a
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In practice, monopolistically competitive markets are:
A. very rare. B. very common. C. virtually nonexistent. D. the only type of market that truly exists.
If velocity is growing by 2 percent per year and real output is growing 6 percent per year, according to the equation of exchange, in order to maintain stable prices, the money supply would have to: a. grow by 3 percent
b. grow by 4 percent. c. grow by 8 percent. d. grow by 12 percent.
One effect of the government-imposed seat belt law in the U.S. has been
a. a dramatic decrease in the number of pedestrian deaths. b. safer driving. c. an increase in the number of accidents. d. a dramatic decrease in the number of driver deaths.
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.