The economy's self-correcting mechanism ensures that neither recessionary nor inflationary gaps will be eliminated eventually
a. True
b. False
Indicate whether the statement is true or false
True
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A perfectly competitive firm should continue to operate even at a loss in the short run if
A. it can cover its variable costs of production. B. its revenues are less than its fixed costs. C. it has some fixed costs that cannot be brought down to zero. D. its output is above the break-even point.
Refer to Table 9-2. Assume the market basket for the consumer price index has two products — bread and milk — with the following values in 2011 and 2016 for price and quantity: The Consumer Price Index for 2016 equals
A) 118. B) 116. C) 86. D) 85.
Suppose the government spending multiplier is 2. The federal government cuts spending by $40 billion. What is the change in GDP if the price level is not held constant?
A) a decrease of less than $80 billion B) an increase equal to $80 billion C) an increase of greater than $80 billion D) an increase of less than $80 billion E) a decrease of more than $80 billion
The only way the standard of living of the average person in a country can increase is if ________ increases faster than ________
A) population; production B) population; income C) population; GDP per capita D) production; population