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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Suppose that the CPI basket contains only 40 heads of cauliflower and 60 bunches of broccoli. If the price of cauliflower goes down by $1 per head and the price of broccoli goes up by $1 per bunch, then
A) the CPI decreases. B) the CPI does not change. C) the CPI increases. D) the CPI might increase or decrease depending how the quantities are affected by the price changes. E) There is not enough information to answer this question.
Which of the following explains why supply is more elastic as more time passes?
A) It is difficult or impossible to increase the quantity produced in a short period of time. B) Consumers have more time to search for substitutes. C) Sellers try to take advantage of a high price in the short term. D) The supply curve becomes generally steeper as more time passes. E) There is no explanation for this phenomenon.
If output decreases, which of the following would occur?
a. Prices of non-labor inputs, input requirements per unit of output and unit costs would all increase and the economy would move upward along the aggregate supply curve. b. Prices of non-labor inputs, input requirements per unit of output and unit costs would all decrease and the economy would move upward along the aggregate supply curve. c. Prices of non-labor inputs, input requirements per unit of output and unit costs would all increase and the economy would move downward along the aggregate supply curve. d. Prices of non-labor inputs, input requirements per unit of output and unit costs would all decrease and the economy would move downward along the aggregate supply curve. e. Prices of non-labor inputs would decrease, input requirements per unit of output would increase and the economy would move upward along the aggregate supply curve.
A legal claim entitling the owner of the claim to fixed annual payments and a lump-sum payment is called a(n)
A. equity share. B. stock. C. bond. D. debit.