To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change.
B. increase.
C. decrease.
D. either increase or decrease depending on the relative shifts of AD and AS.
Answer: C
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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.
Suppose a monopolist has TC = 100 + 10Q + 2Q2, and the demand curve it faces is p = 90 - 2Q. What will be the price, quantity, and profit for this firm?
What will be an ideal response?
Calculate GDP for an economy with exports of $5 trillion, investment of $1.5 trillion, consumption spending of $11 trillion, imports of $6 trillion, and government purchases of $3 trillion
Which market model has the least number of firms?
A. Pure monopoly B. Pure competition C. Oligopoly D. Monopolistic competition