The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending.
B. recessionary gaps.
C. expansionary gaps.
D. unemployment.
Answer: B
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"Because the United States is the largest economy in the world and can produce anything it needs domestically, there are no gains from trade for the United States." Is the previous statement correct or incorrect?
What will be an ideal response?
We are interested in long-term growth primarily because it brings
A) higher price levels. B) lower price levels. C) higher standards of living. D) trade wars with our trading partners.
Price equals the minimum of long-run average cost
A) in a long-run equilibrium. B) in a short-run equilibrium as well as in a long-run equilibrium. C) whenever average revenue equals marginal cost. D) along a horizontal long-run supply curve, but not along an upward sloping long-run supply curve.
In the long run, when economic profit is greater than zero in a perfectly competitive industry, _____
a. existing firms contract their production levels b. firms suffer losses but decide to operate c. there is an upward pressure on the market price of the good d. new firms enter the industry