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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Which of the following would prevent a labor market from being classified as perfectly competitive?
a. It is difficult for new workers to enter the market. b. All workers have the same abilities. c. Exiting the market is easy for workers who are currently in the market. d. Both buyers and sellers of labor are well-informed about market conditions. e. Each firm hires only a tiny fraction of the total labor in the market.
The reserve requirement is 4 percent, banks hold no excess reserves and people hold no currency. If the Fed sells $10,000 worth of bonds, what happens to the money supply?
a. it increases by $250,000 b. it increases by $200,000 c. it decreases by $200,000 d. it decreases by $250,000
In efficient markets, investment capital flows toward profit opportunities.
Answer the following statement true (T) or false (F)
If no foreign companies produce in a country, but many of the country's companies produce abroad, then
A. the country's GNP and GDP will tend to be equal. B. the country's GNP will tend to exceed its GDP. C. the country's GDP will tend to exceed its GNP. D. the country's GDP will tend to be equal to its domestic income.