The automatic mechanism can best be described as:
A) the process of the economy adjusting back to potential GDP without any action taken by the government
B) the result of monetary policy implemented by the Fed restoring full employment
C) how fiscal policy is used to return the economy to its potential
D) using rule-based policies to stabilize the economy
A
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If the demand for a commodity is perfectly elastic, a downward shift in supply will result in lower prices
Indicate whether the statement is true or false
In an open economy, the government deficit is 600 and saving exceeds investment by 500, so in equilibrium the trade deficit (IM ? X) must be
a. 100. b. 200. c. 300. d. 700.
When the price of sausages is $2.00 per pound, consumers buy 50 pounds of fish. When the price of sausages rises to $3.00 per pound, 60 pounds of fish are purchased. The cross price elasticity of demand between sausages and fish is approximately equal to
A) +0.04. B) -0.45. C) +2.20. D) +0.45.
In economic terms, interest is the payment for
A. both consumer and capital goods. B. stocks. C. current command over resources. D. producers' goods.