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

Economics

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Economic models are often expressed in

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The economist known for his early empirical work supporting the efficient markets hypothesis is

A) Milton Friedman. B) John Muth. C) Eugene Fama. D) Glenn Hubbard.

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Which of the following is not a consequence of above-equilibrium wages in a labor market?

a. a surplus of labor b. unemployment c. more unionized jobs d. All of the above are consequences of above-equilibrium wages.

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Harriet enjoys watching both American Idol and Desperate Housewives on television. Her preferences correspond to the utility function U(A,D) = 2A + 4?D, where A stands for the number of hours she watches American Idol and D is the number of hours she watches Desperate Housewives.

a. How would Harriet rank the following alternatives: 4 hours of American Idol and 2 hours of Desperate Housewives, 2 hours of American Idol and 4 hours of Desperate Housewives and 3 hours of American Idol and 3 hours of Desperate Housewives? b. Suppose that one week, Desperate Housewives is not shown, but there is a two-hour American Idol special (instead of the usual one-hour program). Is Harriet better off or worse off? Explain. c. Would Harriet's preferences change if her utility function was expressed as U(A,D) = 2A + 4?D+6? Why or why not? What will be an ideal response?

Economics