The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier.
B. self-correcting property.
C. short-run equilibrium property.
D. long-run equilibrium property.
Answer: B
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At __________ income levels on the LM curve, the interest rate must be __________
A) higher; lower B) lower; higher C) higher; unchanged D) higher; higher
If the Fed buys government bonds on the open market, which of the following is likely to occur?
A. The money supply will expand. B. The market rate of interest on government bonds will increase. C. The market rate of interest on corporate bonds will increase. D. The amount of investment spending will decrease.
When expectations of inflation are revised downward, the short-run Phillips curve: a. shifts rightward. b. becomes steeper. c. shifts leftward
d. becomes flatter.
Innovation is the act of putting an invention to practical use.
Answer the following statement true (T) or false (F)