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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The type of credit insurance that landed AIG into trouble in 2008 is called
A) insurance rate swaps. B) monoline insurance. C) default insurance. D) credit default swaps.
In New York City, apartment rent can be adjusted only when a tenant leaves. This leads
A) people to change apartments often. B) landlords to encourage tenants to stay in their apartments. C) tenants to stay in apartments longer than they would otherwise. D) businesses to build new rental units.
If labor becomes more productive, the production possibilities frontier will
A. shift to inward, toward the origin. B. remain constant, but output will increase as unemployment falls. C. shift to outward away from the origin. D. remain constant, but output will fall as less labor is needed to produce the same level of output.
Use the above table. At an income of $50
A. real dissaving is $50. B. real saving is $10. C. real saving is $20. D. real dissaving is $10.