The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment.
B. exogenous spending.
C. recessionary gaps.
D. expansionary gaps.
Answer: D
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In conditions of full employment
A) no one in or out of the labor force is unemployed. B) the only unemployment results from a normal frictions and structural mismatches in the labor market. C) the only unemployment results from cyclical swings in economic activity. D) no one in the labor force is unemployed.
Which of the following groups would not tend to lose from unexpected inflation? a. Retirees on fixed pensions
b. Creditors. c. Those whose incomes are tied to long-term contracts. d. Those whose wages have cost of living adjustment clauses in their contracts.
Under perfect competition
a. the only major difference between firms is the mark-up they use to determine prices b. a single seller sets the price c. a small number of sellers offer a differentiated product d. sellers offer a standardized product e. a small number of buyers and sellers negotiate the market price
The president of the United States receives tax policy advice from economists in the
a. Federal Reserve. b. Department of Justice. c. Department of the Treasury. d. Congressional Budget Office.