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
You might also like to view...
When the price level falls,
A) there is a movement upward along the AS curve. B) both the potential GDP line and the AS curve shift leftward. C) the AS curve shifts leftward but the potential GDP line does not shift. D) the AS curve shifts rightward but the potential GDP line does not shift. E) there is a movement downward along the AS curve.
Switzerland has experienced the lowest rate of price increases in the post World War II period. Consequently, Lucas would predict
A) small supply responses to variations in the inflation rate. B) large supply responses to variations in the inflation rate. C) small demand responses to variations in the inflation rate. D) large demand responses to variations in the inflation rate.
________ refers to alternating periods of economic expansion and economic recession in an economy
A) Fiscal policy B) Labor productivity C) The business cycle D) Positive economic analysis
Consumer equilibrium occurs at:
a. any point of intersection between the budget line and an indifference curve. b. a point of tangency between the budget line and an indifference curve. c. the point where the slope of the indifference curve equals the ratio of the quantities. d. a point where the budget line cuts the curve from below.