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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The level of GDP, all else held constant, will tend to increase when ________.
A. reserve requirements are increased B. there is an increase in the discount rate C. the federal funds rate is increased D. the Federal Reserve buys government securities in the open market
If a security pays $55 in one year and $133 in three years, its present value is $150 if the interest rate is
A) 5 percent. B) 10 percent. C) 12.5 percent. D) 15 percent.
If a racial group exhibits lower scores on IQ tests, this is evidence of their reduced intelligence
Indicate whether the statement is true or false
Which of the following is a question that an economist would use to break down a problem?
A. Will the average income per person for the society increase? B. Does the decision maker have a track record of being rational? C. Is there a scarce resource that will be allocated? D. How might one person feel about the solution to the problem?