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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Differentiate between the following
a) Normal goods and inferior goods b) Substitutes and complements
In the early 1980s the government's primary method of combating inflation was
A) price and wage controls. B) undoing the "self-inflicted" wounds. C) restrictive monetary policy. D) indexing bonds to protect savers.
The GDP deflator is
A) an index that utilizes a consumer's market basket of goods in calculating the inflation rate. B) the most general indicator of inflation since it measures changes in the prices of all goods and services in the economy. C) an index used to calculate inflation at the wholesale level. D) the least used index because it is so costly to calculate.
Game theory is the study of which of the following?
a. The prisoner's dilemma b. The behavior of people engaged in recreational games c. The mutual interdependence of firms in oligopolistic industries d. The downward sloping demand curve faced by firms in an oligopoly e. The interaction between marginal and average revenue