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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To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
If the source of economic instability is generally variations in spending, then the Fed should
A) buy gold. B) raise taxes. C) set money supply targets. D) print more money.
One key difference between options contracts and futures contracts is:
A. in an options contract, the rights belong to one party. B. in a futures contract, one part has more rights than the other. C. in a futures contract all rights are held by just one party. D. with an options contract both parties have equal rights.
All of the following are programs in the Social Security system except
A. the Old Age and Survivors Insurance program. B. the Temporary Assistance to Needy Families (TANF) program. C. the Disability Insurance program. D. the Medicare program.