The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier.
B. self-correcting property.
C. short-run equilibrium property.
D. long-run equilibrium property.
Answer: B
You might also like to view...
Use a graph to show the effects of a contractionary monetary policy to reduce inflation and move an economy back to potential real GDP. Explain what happens to aggregate demand, real GDP, and the price level
What will be an ideal response?
A depreciation of the U.S. dollar makes American goods cheaper relative to foreign goods, resulting in a ________ in net exports in the U.S. and a ________ shift of the IS curve in the U.S., everything else held constant
A) fall; leftward B) rise; leftward C) fall; rightward D) rise; rightward
Having a comparative advantage in the production of a good implies that a country
a. should specialize in the production of the good b. is able to produce the good with fewer resources than another country c. should not specialize in the production of the good d. also has the absolute advantage in the production of the good e. cannot have an absolute advantage in the production of the good
Which of the following is a symptom of a price floor?
a. scalping of Super Bowl tickets b. surplus cheese c. the New York city housing shortage d. black markets e. milk shortages