In the long run, a year-long drought that destroys most of the summer's wheat crops causes permanently:
A. higher prices.
B. lower prices.
C. lower output.
D. None of these is true.
Answer: D
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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.
Identify an example of a flow variable
a. The volume of the federal government's debt b. The population of a country in a particular year c. The total amount of an individual's wealth d. The amount of sales tax collected per year e. The total amount of unemployment in an economy
Interest rates rising and falling by a wide range on a regular basis often are an indication of
A. seasonal unemployment. B. economic instability. C. flexible capital. D. price equilibrium.
If the required reserve ratio (RR) is 20 percent, the simple deposit multiplier is
A) 2. B) 5. C) 10. D) 20.