An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase
B. increase; increase
C. decrease; decrease
D. increase; decrease
Answer: D
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Answer the following questions true (T) or false (F)
1. A surplus occurs when the actual selling price is above the market equilibrium price. 2. A competitive market equilibrium is a market equilibrium with many buyers and sellers. 3. In response to a shortage, the market price of a good will rise. As the price rises, the demand will decrease and supply will increase until equilibrium is reached.
A reduction in the cost of cable TV subscriptions will ________ the ________ for televisions
A) decrease; supply B) decrease; demand C) increase; supply D) increase; demand E) None of the above is correct.
In Thailand in the late 1990s, there was pressure for the value of the baht to decline as foreign investors began to
A) increase their investments in Thailand and exchanged their dollars for baht. B) increase their investments in Thailand and exchanged their baht for dollars. C) sell off investments they had made in Thailand and traded in their baht for dollars. D) sell off investments they had made in Thailand and traded in their dollars for baht.
Voluntary exchange ________ economic efficiency because neither the buyer nor the seller would agree to a trade unless ________
A) decreases; they both benefit B) increases; they both benefit C) decreases; neither benefit D) increases; only one party benefits