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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A firm's profit is
a. greater if it is a corporation rather than if it is a sole proprietorship b. higher if it raises its price than if it does not c. lower if it lowers its price than if it does not d. never taxed by the government e. its revenue minus its costs
Credit card balances are not considered to be money primarily because they:
A. are not part of people's wealth. B. are an asset used in making transactions. C. are rarely used to make purchases. D. do not represent an obligation to pay someone else.
What is “crowding out”? Why is it important in discussions of fiscal policy? Use an appropriate diagram to illustrate your answer.
What will be an ideal response?
In the exhibit below depicts the short run cost curves of a perfectly competitive firm. At output 45, Average Fixed Cost (AFC) is approximately
a. 1 b. 3 c. 4 d. 45