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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Economic models are often expressed in
A. equations. B. words. C. graphs. D. physical objects.
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.
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.
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?