If we observe an economy adjusting to potential GDP as prices fall and real output increases, we can conclude that _____
a. the economy was experiencing an expansionary gap
b. there is a labor surplus
c. the economy was experiencing a recessionary gap
d. self-correction is not the process that is occurring
e. there are widespread labor shortages
c
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When a government changes the official exchange rate target in a fixed exchange regime, there is a danger of
A) realignment pain. B) systemic risk. C) crowding out. D) a beggar-thy-neighbor effect.
Most economists agree that a well-designed central bank would:
A. be independent of political pressure. B. make its policy actions difficult to interpret. C. be run by one key policy maker. D. be accountable only to other banks.
The relationship between quantity supplied and the price of output is such that
A) an increase in quantity will automatically lead to a reduction in price.
B) an increase in price will lead to an increase in quantity supplied.
C) an increase in price will produce an inward shift in the supply curve.
D) quantity will decrease as the number of firms increases.
If consumers expect that the price of pretzels will decrease next week, what would happen today?
A) Demand today for pretzels would decrease. B) Demand today for pretzels would increase. C) Demand today for pretzels would be unaffected. D) Supply today of pretzels would decrease.